Africa and the System of Investor-State Dispute Settlement: To Reject or Not to Reject? Uche Ewelukwa Ofodile*

Abstract

This paper examines the position of countries in Sub-Saharan Africa (SSA) regarding proposals to reform the investor-State dispute settlement (ISDS) system. Despite their silence on ongoing discussions about the future of the ISDS system and possible pathways for reform, SSA countries are making their position on the issue known. The paper argues that the position of SSA countries can be gleaned from instruments that these countries have pushed for at the sub-regional level. In particular, in the Investment Agreement for the COMESA Common Investment Area (CCIA),[1] in the SADC Bilateral Investment Treaty Template (SADC Model BIT),[2] and even in the SADC Protocol on Investment, countries in SSA appear to express a desire for a radically transformed ISDS system. However, closer inspection suggests that SSA countries are inconsistent in their actions when it comes to reforming the ISDS mechanism. Although these countries espouse a vision of an ISDS mechanism that is different from the existing mechanism, their actions tell a different story. For example, the CCIA is not operational, the SADC Model BIT is not binding and very few countries, if any, have taken steps to model their bilateral investment treaties (BITs) after it. And in their BITs and related treaties, SSA countries still cling to the traditional approach to ISDS and BITs more generally. Furthermore, while SSA countries would prefer to limit investor access to ISDS, the demise of the SADC Tribunal in the wake of Mike Campbell (Pvt) Ltd and Others v. Republic of Zimbabweundermines efforts to project domestic and regional institutions in Africa as credible alternatives to international arbitration. The paper suggests that the inconsistent position of SSA countries on the ISDS question deserves closer study. Also deserving closer study is an assessment of the experience of SSA countries with the ISDS system since the system emerged some forty years ago. Finally, attention must be paid to the myriad of factors that presently limit the capacity of countries in Africa to negotiate tailored and development-oriented international investment agreements (IIAs) as well as factors that undermine their effective participation in the international investment law regime more generally. 

Introduction

That the system of investor-State dispute settlement (ISDS) is in crisis in not in doubt and is a fact increasingly acknowledged by critics and defenders of the system alike.[3] Strangely, the voices of countries in Sub-Saharan Africa (SSA) have been largely absent from on-going debates about the problems with the system and options for reform. Indeed, compared to countries in Latin America[4] and the Asia/Pacific,[5] countries in SSA appear to be content with the present system, have generally refrained from openly criticizing the system, and are still ratifying the foundational treaties of the system.[6] To date, South Africa stands out as the only country in SSA to have openly criticized the ISDS system[7] and to have expressed general dissatisfaction with the very foundation of the ISDS system – bilateral investment treaties (BITs).[8] The South African government also stands out as the only government in SSA that is taking active steps to limit exposure to the ISDS system by attempting to preserve domestic policy space while at the same time offering protection to foreign investors.[9]

As a result of their collective silence, determining the precise position of SSA countries regarding the functioning of the ISDS system is difficult. Several pressing questions beg for answers. Are SSA countries satisfied with the present system of ISDS? Which aspects of the ISDS mechanism do SSA countries consider problematic and in need for reform? Do SSA countries espouse any particular vision of a mechanism for the settlement of investment disputes? Do they espouse any particular vision of international investment law more generally? Are SSA countries likely to welcome current proposals for reform that the United Nations Conference on Trade and Development (UNCTAD) suggests? If adopted, will UNCTAD’s reform proposals serve the interests of countries in SSA? Do UNCTAD’s proposals really address the fundamental problems with the ISDS system and international investment law regime more generally?

This paper posits that while African countries appear to be mere spectators in the on-going debate about the ISDS system, these countries have not been particularly silent on the substance of the debate and are critical of the ISDS system. Arguably, the position of countries in SSA can be gleaned from their approach to the settlement of investment disputes at the sub-regional level, particularly in Eastern and Southern Africa. Evident in the Investment Agreement for the COMESA Common Investment Area (CCIA) and in the SADC Bilateral Investment Treaty Template (SADC Model BIT) are attempts by some countries in the SSA to introduce features in the ISDS mechanism that are radically different from those that are in the traditional mechanism, this paper argues.

However, while their actions at the sub-regional level definitely suggest that SSA countries are dissatisfied with the ISDS system, it is not entirely clear that these countries would fully embrace UNCTAD’s proposals for reform. For the most part, SSA countries are not very clear or consistent in their actions when it comes to ISDS. On the one hand, the CCIA and the SADC Model BIT suggest that SSA countries are dissatisfied with the traditional approach to ISDS. On the other hand, in the BITs that they negotiated in the past and are presently negotiating, these countries make little or no effort to modify or abandon the system. Furthermore, while the CCIA and the SADC Model BIT suggest that SSA countries would welcome proposals to reform the ISDS system, the fact that neither instrument is currently in effect is very telling; the CCIA never went into effect and no country in the SADC zone has made any effort to follow the model set out in the SADC Model BIT. Furthermore, although, the SADC Model BIT suggests a region desiring to depart from the traditional approach to ISDS, the SADC Protocol on Finance and Investment, a regional treaty that is actually in force, is less ambitious with regards to reforming the ISDS mechanism.[10]

What about UNCTAD’s proposals for reform?[11] UNCTAD has outlined five main reform paths: (i) promoting alternative dispute resolution; (ii) tailoring the existing system through individual IIAs; (iii) limiting investor access to ISDS; (iv) introducing an appeals facility; and (v) creating a standing international investment court. Of the five reform paths, SSA countries are most likely to favor promoting alternative dispute resolution, limiting investor access to ISDS, and tailoring the existing system through individual IIAs. However, all three options are resource intensive and call for a level of expertise that most countries in SSA presently lack. This may explain why few countries in the region are embracing the idea of “a new generation of investment policies,”[12] and why so few countries in the region are following South Africa’s lead of taking a defensive approach in international investment agreements (IIAs). With the exception of South Africa, most countries in SSA lack the capacity to negotiate more tailored agreements, and most are not able to withstand the political pressure that powerful partners frequently bring to bear on poor countries with extremely weak governance institutions. Although the idea of a standing international investment court is one that may be in the interest of developing countries generally, Africa’s track record of utilizing the WTO dispute settlement mechanism suggests that this option may not work for poor countries or countries with limited technical, financial and legal resources. Overall, UNCTAD’s reform proposals preserves the main features of the existing system, does not address the core ISDS and BIT related challenges that SSA countries experience, and is largely premised on the availability of necessary resources and the possession of requisite capacity.

All in all, when it comes to the position of SSA countries regarding the functioning of the ISDS system, the picture is not altogether very clear. The picture is at one and the same time that of a continent dissatisfied with a system and willing to orchestrate changes and that of a continent unwilling and/or unable to force changes when it comes to dealings with external partners, particularly developed countries. By and large, the political will to take a defensive approach to ISDS and BITs more generally appear to be absent in SSA. Moreover, most SSA countries appear to lack the capacity needed to formulate and execute more defensive approaches to the ISDS system.

The paper points to the need for further studies into the past experiences of SSA countries with the ISDS system and the need to fully explore and evaluate the precise position of SSA countries when it comes to the ISDS and BITs more generally. There is need to analyze and better understand the constraints (e.g. resource, capacity, political, etc.) to the effective and meaningful participation of SSA countries in the international investment law regime generally and the ISDS system in particular.

Going forward, countries in SSA ought to take economic diplomacy more seriously and ought to give serious consideration to their investment policy as well as their participation in the international investment law regime. The starting point must be a thorough review of their BIT history as well as a comprehensive review of their past participation in the ISDS. Instead of each country continuing to develop a complex and confusing web of BITs, might a common African position on international investment agreement serve their interests better? Might a multilateral investment treaty, negotiated possibly at the WTO level, serve Africa better?[13]

  1. Background: Africa and the Investor-State Dispute Settlement Mechanism

Countries in SSA have generally embraced the international investment law regime. SSA countries have concluded numerous BITs and have ratified the multilateral treaties that underpin the ISDS system including: the New York Convention on the Recognition and Enforcement ofForeign Arbitral Awards (New York Convention), the International Convention on Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA Convention), and the Agreement Establishing the African Trade Insurance Agency. Regarding the ISCID Convention, Africa records high participation. With its May 21, 2013 ratification of the ICSID Convention, Sao Tome and Principe became the forty-fifth country in Africa to ratify the said convention. Three states in the continent (Namibia, Ethiopia, and Guinea-Bissau) have signed but not ratified the ICSID Convention and only six countries in the region have neither signed nor ratified the instrument.[14]

Beyond treaty ratification, what is the actual record of SSA countries in terms of participation in the ISDS system? When it comes to the ISDS system, while SSA countries have been involved as respondents, their involvement as arbitrators, conciliators and committee members have been dismal.

2.1.    Africa and the ISDS: Participation as Respondents

Countries in Africa are increasingly subjected to ISDS mechanisms, a fact attributable in part to their growing network of BITs. Not only are the number of investment disputes against SSA countries rising, the types of claims that investors are bringing are also changing. Investors are not only challenging outright expropriation but are increasingly also challenging the regulatory activities of host countries in areas such as water and sanitation policies[15] and race relations.[16] In an increasing number of cases, SSA countries have to grapple with complex and unsettled legal issues and very lengthy, protracted and expensive litigation.

In terms of the geographic distribution of all cases registered under the ICSID Convention and Additional Facility Rules by states involved, Sub-Saharan Africa accounts for 16 percent of these cases.[17] The distribution of ICSID cases by economic sector ought to be a concern for SSA countries. The economic sectors that attract the most cases (Oil, Gas & Mining and Electric Power & Other Energy) are also the sectors that dominate the economies of SSA countries and the sectors that attract the most foreign investment in the region. Oil, Gas & Mining accounts for 25% of all cases registered under the ICSID Convention and Additional Facility Rules[18], followed by Electric Power & Other Energy (12%).[19] Agriculture, Fishing & Forestry, another sector that has seen a lot of activity in the continent in the last decade, accounts for 5% of all cases registered under the ICSID Convention and Additional Facility Rules.[20]

2.2.     Africa and ISDS: Participation of Arbitrators

Although accounting for 16% of all cases registered under the ICSID Convention and Additional Facility Rules, compared to other regions, Africans are not involved in the ISDS system as arbitrators, conciliators, or committee members. Indeed, the participation of SSA countries in the ISDS as arbitrators in the past sixty years has been dismal. SSA countries account for only 2% of arbitrators, conciliators and ad hoc Committee Members appointed in cases registered under the ICSID Convention and Additional Facility Rules.[21] In terms of state of nationality of arbitrators, conciliators and ad hoc Committee Members appointed in cases registered under the ICSID Convention and Additional Facility Rules, participation has been in the range of 7 (Senegal), 4 (Somalia), 3 (Nigeria & Togo), 2 (Benin, Gabon, Ghana, Madagascar, & Malawi) and 1 (Cameroon, Central African Republic, Mauritania/France, South Africa, and Sudan).[22]

What is evident is that a majority of countries in SSA have never had their citizens serve as arbitrators, conciliators or ad hoc Committee Members in cases registered under the ICSID Convention and Additional Facility Rules. It would appear that neither the ICSID nor African States as respondents in investment disputes have been particularly interested in appointing Africans to serve as arbitrators in investment dispute arbitration. Indeed, regarding appointments by State Parties, only 15 people from Sub-Saharan Africa have ever been appointed by Parties. This compares very poorly to other regions; Western Europe has seen 168 appointments by Parties and North America has seen 235 appointments by Parties.

The limited participation of nationals of SSA countries in investment arbitration is a major concern and deserves closer scrutiny. Limited participation as arbitrators, conciliators and ad hoc Committee Members places SSA countries on the margins of the international investment law regime. Given their limited participation, SSA countries are not contributing to the development of jurisprudence in the field, are not seizing the opportunity that arbitration presents to “fill gaps” in BITs, and are missing out on the opportunity to shape obligations and develop interpretations of investment treaties that are supportive of development objectives.

2.3.     The ISDS System: The Position of SSA Countries

To date, South Africa stands out as the only country in SSA that has been openly critical of the system. In 2009, South Africa’s Department of Trade and Industry noted the fact that “[i]nvestors have become aware of the attractive status quo under the global investment regime” and that “hundreds of long-ignored investment treaties offer investors access to an investor-state dispute settlement mechanism, allowing them to take their disputes directly to international arbitration – leapfrogging domestic legal systems (and thus, any safeguards designed to protect important public goods).”[23] South Africa is the only country in SSA that carried out a review of its BITs,[24] is the only country in the region that has let some existing BITs expire, and is the only country in the region that is taking steps to abandon the ISDS system completely. Most countries in Africa including Nigeria, an economic power house in the region, are not following South Africa’s example. Unlike South Africa, Nigeria is not taking any steps to change its approach to BITs and ISDS in particular. For example, Nigeria is not letting existing BITs expire and is not taking any step to renegotiate BITs with a view to clarifying vague treaty provisions, introducing exceptions or limiting access existing to ISDS.

  1.   Africa and the ISDS System: A Holistic Approach to Reforming the ISDS   System?

Based on developments at the sub-regional level, SSA countries appear to share most of the concerns that have been expressed about the functioning of the ISDS, including concerns about lack of legitimacy, lack of transparency, the cost of arbitration, problems of inconsistent and erroneous decisions, possibility of very large awards, risk of multiple claims arising from a single case, forum shopping, etc. In Eastern Africa and Southern Africa particularly, while not rejecting completely the idea of ISDS, there appears to be a desire for a dispute settlement mechanism that differs in several respects from the traditional ISDS system.

3.1.    COMESA/SADC: Overview

The Common Market of Eastern and Southern Africa (COMESA) was established by a treaty signed on November 5, 1993 in Kampala, Uganda. The agreement was ratified a year later in Lilongwe, Malawi on December 8, 1994. The goal of the COMESA treaty is to create a common market in Eastern and Southern Africa. Nineteen countries are part of COMESA.[25] The CCIA was adopted at the twelfth Summit of COMESA Authority of Heads of State and Government, held in Nairobi, Kenya, on 22nd and 23rd of May 2007. The CCIA builds on a number of earlier COMESA treaties and agreements.[26] In the preamble to the CCIA, Member States express a conviction that the measure, “shall contribute towards the realisation of the Common Market and the achievement of sustainable development in the region.”[27]

The precursor of the Southern African Development Community (SADC) was established on August 17, 1992 in Windhoek, Namibia with the adoption of the Declaration and Treaty of SADC.[28] Fifteen countries are part of the SADC.[29] The objectives of the SADC are inter alia to “achieve development and economic growth, alleviate poverty, enhance the standard and quality of life of the peoples of Southern Africa and support the socially disadvantaged through regional integration.”[30] These and other objectives are to be achieved through increased regional integration, particularly, through inter alia the harmonization of political and socio-economic policies and plans of member states[31] as well as through the development of policies aimed at the progressive elimination of obstacles to the free movement of capital and labor, goods, services and peoples of the region. With the adoption of the SADC Treaty Amendment (2001), SADC main institutions were restructured. Article 16 of the SADC Treaty provides for the constitution of a tribunal stating that the Tribunal “[s]hall be constituted to ensure adherence to and the proper interpretation of the provisions of this treaty and subsidiary instruments.”[32]

3.2.   Africa’s Regional Trade Agreements (RTA), Foreign Investment and Dispute Settlement

In the CCIA and SADC Model BIT, SSA countries make no attempt to abandon ISDS as a means for resolving investment disputes; both instruments provide for ISDS as well as State-State arbitration proceedings. However, in both instruments, there is a noticeable attempt to address some of the problems with the traditional ISDS mechanism. A holistic approach is taken in both instruments meaning that changes are not only made to the sections dealing with dispute settlement but also to parts of the instruments. First, evident in the CCIA and the SADC Model BIT is an attempt to clarify key terms and phrases thus limiting the discretion of arbitral tribunals and preventing expansionist interpretations. Second, there is also a clear attempt to limit access to ISDS; some matters are expressly excluded from dispute settlement. Third, both instruments embrace the idea of investor obligations and responsibilities and strive to achieve a balance of rights and obligations. Fourth, in both the CCIA and SADC Model BIT, there is a noticeable attempt to preserve domestic regulatory space. Overall, a study of the CCIA and the SADC Model BIT suggests that to SSA countries, the problems with the ISDS system cannot be addressed by tinkering exclusively with the system. In order words, a reform of the ISDS requires that other aspects of international investment law be seriously evaluated.

3.2.1.      African States, IIAs and Interpretative Function

In the CCIA, Member States of COMESA go to great lengths to exercise their treaty interpretation role. Potentially ambiguous words and phrases are defined with sufficient clarity. Defined in the CCIA are words and phrases such as: “Investment”; “COMESA Investor”; “juridical persons”; “substantial business activity”;[33] “fair and equitable treatment”; and “like circumstances.” “Investment” is defined to mean “assets admitted or admissible in accordance with the relevant laws and regulations of the COMESA Member State in whose territory the investment is made.”[34] This definition is followed by an open-ended list of examples of what constitutes assets under the CCIA. Explicitly excluded from the definition of investment are:

goodwill market share, whether or not it is based on foreign origin trade, or rights to trade; claims to money deriving solely from commercial contracts for the sale of goods and services to or from the territory of a Member State to the territory of another Member State, or a loan to a Member State or to a Member State enterprise; a bank letter of credit; or the extension of credit in connection with a commercial transaction, such as trade financing.[35]

Regarding the “fair and equitable treatment” obligation, Members States are obliged to accord fair and equitable treatment to COMESA investors and their investments, “in accordance with customary international law.”[36] For avoidance of doubt, Article 14(2) of the CCIA states that what is prescribed is “the customary international law minimum standard of treatment of aliens as the minimum standard of treatment to be afforded to covered investments and does not require treatment in addition to or beyond what is required by that standard.”[37] Article 14(3) goes on to state that “Member States understand that different Member States have different forms of administrative, legislative and judicial systems and that Member States at different levels of development may not achieve the same standards at the same time.”[38]

The CCIA provides that qualifying investors in “like circumstances” as domestic investors are entitled to national treatment.[39] But, what are “like circumstances”? Article 17(2) provides that:

For greater certainty, references to ‘like circumstances’… requires an overall examination on a case by case basis of all the circumstances of an investment including, inter alia: (a) its effects on third persons and the local community; (b) its effects on the local,regional or national environment, including the cumulative effects of all investments within a jurisdiction on the environment; (c) the sector the investor is in; (d) the aim of the measure concerned; (e) the regulatory process generally applied in relation to the measure concerned; (f) and other factors directly relating to the investment or investor in relation to the measure concerned; and the examination shall not be limited to or be biased towards any one factor.[40]

The same effort to avoid ambiguity and exercise interpretive function is found in the SADC Model BIT.[41] In the SADC Model BIT, Member States preserve their interpretive role by specifically providing that:

[J]oint decision of the State Parties, each acting through its representative designated for purpose of this Article, declaring their joint interpretation of a provision of this Agreement, shall be binding on any tribunal, and any decision or award issued by a tribunal must apply and be consistent with that joint decision.[42]

3.2.2.   Limiting Access to ISDS: Exclusion of Certain Matters from the                  Dispute Settlement Mechanism

Both the CCIA and the SADC Model BIT attempt to reduce the subject-matter scope for ISDS claims. For example, Part One of the CCIA sets out the general obligations of Member States and also addresses other institutional issues that are not justiciable. Article 10 clearly states that “[n]o investor shall have recourse to dispute settlement for any matter relating to Part One of this Agreement.”[43] The CCIA also restricts the range of investors who qualify for protection under the treaty and who can bring claims against host states. The CCIA applies only to investors who have specifically registered with the relevant authority of a Member State and only covers investments made in accordance with the laws and regulations of Member States.[44] Other steps to limit investor access to ISDS, such as the requirement to exhaust local remedies, appear in the section of the CCIA that deal specifically with dispute settlement.[45]

3.2.3.     Limiting Access to ISDS: Balance of Rights and Obligations for           Investors

A feature found in the CCIA and the SADC Model BIT but absent in most of the BITs that SSA countries have concluded to date is the imposition of duties on foreign investors. Part Two of the CCIA sets out the rights as well as the obligations of a COMESA Investor. The stated objectives of Part Two are “to provide COMESA investors with certain rights in the conduct of their business within an overall balance of rights and obligations between investors and Member States.”[46] For example, Article 13 stipulates that COMESA investors and their investments “shall comply with all applicable domestic measures of the Member State in which their investment is made.”[47] Whether and to what extent the failure to comply with Article 13 will affect the right of an investor to invoke the dispute settlement provisions of the CCIA is a question that is not clearly answered in the agreement.

The SADC Model BIT takes the idea of investor obligation a step further. Part Three (Rights and Obligations of Investors and State) lays out a range of obligations that investors are expected to comply with including: obligation on corruption (article 10), compliance with domestic law (Article 11), provision of information (Article 12), environmental and social impact assessment (Article 13), minimum standard for human rights, environment and labor (Article 15), corporate governance standards (Article 16), investor liability (Article 17), and transparency of contracts and payments (Article 18).[48] Compared to the CCIA, the SADC Model BIT is clearer on the consequences of a failure by an investor to comply with the obligation stipulated in the agreement. In a dispute settlement proceeding under the SADC Model BIT if a State Party alleges that an Investor or its Investment has failed to comply with its obligations, “the tribunal hearing such a dispute shall consider whether [the] breach, if proven, is materially relevant to the issue before it, and if so, what mitigating or off-setting effects this may have on the merits of a claim or on any damages awarded in the event of such award.”[49]

3.2.4.   Limiting Access to ISDS: Broadening of Regulatory Space for Host    Governments and Exclusion of Certain Types of Claims from the    Scope of Arbitral Review

In both the CCIA and SADC Model BIT, a defensive approach is taken to preserve domestic regulatory space. This is done through the use of general exceptions, specific exceptions and safeguard measures.

3.2.4.1.      General Exception

Traditional BITs that most countries in Africa have concluded do not contain exception clauses.[50] The CCIA and the SADC Model BIT depart from this trend. The CCIA has a “general exception” clause very similar to that found in Article XX of the General Agreement on Tariff and Trade. Article 22(1) states:

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between investorswhere like conditions prevail, or a disguised restriction on investment flows, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member State of measures:

  1. designed and applied to protect national security and public morals;
  2. designed and applied to protect human, animal or plant life or health;
  3. designed and applied to protect the environment; or
  4. any other measures as may from time to time be determined by a Member State, subject to approval by the CCIA Committee.[51]

The CCIA also has a security exception which provides that nothing in the agreement shall be construed to “preclude a Member State from applying measures that it considers necessary for the fulfillment of its obligations under the United Nations Charter with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests.”[52]

The SADC Model BIT has an exception clause (Article 25) very similar to that in the CCIA.[53] Also excluded from the ambit of SADC Model BIT are taxation measures (subject to the continued application of the provision on expropriation),[54] measures that a State considers necessary for the protection of its national security interests,[55] as well as “non-discriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies.”[56]

3.2.4.2.     Specific Exceptions with Regards to Expropriation

Both the CCIA and SADC Model BIT follow the pattern in traditional BITs in regards to expropriation. However, there are novel features in both instruments. Although the core obligation of states in regards to expropriation is similar to what is found in traditional BITs, some state actions are explicitly immunized and made non-justiciable. Under the CCIA, certain matters relating to intellectual property law as well as bona fide regulatory measures are outside the scope of the expropriation clause. Regarding intellectual property law, Article 20(6) exempts from the provision on expropriation, “the issuance of compulsory licences granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with applicable international agreements on intellectual property.”[57] Article 20(8) also explicitly states that “international law principles on police powers, bona fide regulatory measures taken by a Member State that are designed and applied to protect or enhance legitimate public welfare objectives, such as public health, safety and the environment, shall not constitute an indirect expropriation . . . .”[58]

Regarding payment of compensation, the SADC Model BIT calls for “fair and adequate” instead of the “Hull formula” that calls for “prompt, adequate and effective” compensation.[59] The SADC Model BIT also stipulates that the assessment of fair and adequate compensation, “shall be based on an equitable balance between the public interest and the interest of those affected, having regards for all relevant circumstances.”[60] The agreement goes on to introduce six factors that should be taken into account in the assessment of fair and adequate compensation.[61]

3.2.4.3.     Safeguard Measures

Borrowing from international trade law,[62] the CCIA permits State Parties to take necessary but defined safeguard measures. Article 24(1) provides:

If, as a result of opening up of economic activities in accordance with this Agreement, a Member State suffers or is threatened with any serious injury, the Member State may take emergency safeguard measures to the extent and for such period as may be necessary to prevent or to remedy such injury. The measures taken shall be provisional and without discrimination.[63]

Although the safeguard provision has no direct bearing on dispute settlement, it narrows the jurisdiction of future arbitral tribunals and expands the scope of defenses a state can assert in the event of a dispute. Since the CCIA is not yet operational, it is impossible to assess how the safeguard measure will work in practice or to speculate how future arbitral tribunals will interpret and apply Article 23(1).

3.2.4.4.     Right of States to Regulate; Right to Development

The SADC Model BIT explicitly addresses the right of States to regulate as well as their right to pursue development goals. Regarding the right to regulate, Article 20.1 stipulates that the Host State “has the right to take regulatory or other measures to ensure that development in its territory is consistent with the goals and principles of sustainable development, and with other legitimate social and economic policy objectives.”[64] With respect to the right to pursue development goals, the SADC Model BIT allows states the discretion to grant preferential treatment to qualifying enterprises “in order to achieve national or sub-national regional development goals.”[65] State Parties also have broad discretion to “support the development of local entrepreneurs,”[66] impose certain performance requirements on investors,[67] and generally take measures necessary “to address historically based economic disparities suffered by identifiable ethnic or cultural groups due to discriminatory or oppressive measures against such groups . . . .”[68]

In conclusion, constraint on policy space, one of the main criticisms of the ISDS system, is an issue that is taken up directly in the CCIA and the SADC Model BIT. The overall intent of the drafters of both instruments is to limit the exposure of States to investment dispute claims and to afford States with necessary defenses if and when investment disputes arise.

  1.    Dispute Settlement Under the CCIA and SADC Model BIT

Very similar to traditional BITs, the CCIA and the SADC Model BIT do not depart from the traditional approach to ISDS and allow investors to bring claims directly against host governments.[69] Also very similar to traditional BITs, both instruments permit claims to be brought to a number of international fora including international arbitration under the ICSID Convention, the international arbitration under the ICSID Additional Facility Rules, and international arbitration under the UNCITRAL Arbitration Rules.[70] Under the CCIA, claims may also be brought to “the competent court of the Member State in whose territory the investment has been made”;[71] the COMESA Court of Justice;[72] and “under any other arbitration institution or under any other arbitration rules, if the both parties to the dispute agree.”[73] Under the SADC Model BIT, claims may also be brought under a regional arbitration forum in a region of one or both State Parties, and if the Investor and the Host State agree, “to any other arbitration institution or under any other arbitration rules.”[74]

Unlike traditional BITs, the CCIA and SADC Model BIT both contain some novel, unique features. The novel features include: greater emphasis on alternative methods of dispute resolution (ADR), greater emphasis on transparency and public participation in dispute settlement processes, limits on investor access to ISDS, and a mechanism for consolidation of related claims.

4.1.      Alternative Methods of Dispute Resolution

The CCIA and the SADC Model BIT make specific reference to alternative dispute resolution (ADR) methods. The CCIA calls for amicable settlement of disputes and mandates resort to alternative methods of dispute settlement. In addition, the CCIA more or less mandates mediation during the cooling off period. The CCIA provides that in the event of a dispute between a Member State and a COMESA investor and where no alternative means of dispute settlement are agreed upon, “a party shall seek the assistance of a mediator to resolve disputes during the cooling-off period . . . .”[75] The CCIA goes on to provide that if no mediator is chosen by the disputing parties prior to three months before the expiration of the cooling-off period, “the President of the COMESA Court of Justice or his designate shall appoint a mediator from the COMESA Secretariat’s list who is not a national of the Member State of the COMESA investor or the Member State(s) party to the dispute.”[76] And such an appointment “shall be binding on the disputing parties.”[77] Mediation rulings shall be implemented immediately if parties to a dispute accept such rulings.[78]

Like the CCIA, the SADC Model BIT strongly encourages resort to ADR methods. However, unlike the CCIA, the SADC Model BIT does not mandate mediation. After submission of the Notice of Intent, “the Investor or the Host State may request mediation of the dispute, in which case the other disputing party may agree to such mediation.”[79]

4.2.     Limiting Investor Access to ISDS

In the CCIA and the SADC Model BIT, there is a clear attempt by States to narrow the range of situations in which investors may resort to ISDS. Investor access to ISDS is limited in at least three ways: (i) a provision requiring the exhaustion of domestic remedies; (ii) a provision stipulating a strict time frame within which investment claims must be lodged; and(iii) clear and explicit fork-in-the-road clauses.

4.2.1.      Exhaustion of Local Remedies

The SADC Model BIT makes ISDS a remedy of last resort by requiring foreign investors to first exhaust all domestic remedies. An Investor may submit a claim to arbitration pursuant to this Agreement, provided that:

the Investor or Investment, as appropriate, (i) has first submitted a claim before the domestic courts of the Host State for the purpose of pursuing local remedies, after the exhaustion of any administrative remedies, relating to the measure underlying the claim under this Agreement, and a resolution has not been reached within a reasonable period of time from its submission to a local court of the Host State . . . .[80]

An investor can dispense with the requirement to exhaust domestic remedies by demonstrating that “there are no reasonably available legal remedies capable of providing effective remedies of the dispute concerning the underlying measure” or by showing that the legal remedies “provide no reasonable possibility of such remedies in a reasonable period of time.”[81] The CCIA does not require investors to exhaust local remedies and appears to dispense with this duty.

4.2.2.      Timeliness of Claims

With the goal of limiting State exposure to claims and preventing the resurrection of old claims, both the CCIA and the SADC Model BIT set a three-year time limit for an investor to bring a claim against a host State. Under the CCIA, “[n]o claim shall be submitted to arbitration if more than three (3) years have elapsed from the date on which the COMESA investor first acquired, or should have first acquired, knowledge of the breach and knowledge that the COMESA investor has incurred loss or damage.”[82] Like the CCIA, the SADC Model BIT sets a time limit on claims by investors. For an investor to initiate a claim against a host State, such an investor must demonstrate that “[n]o more than three years have elapsed from the date on which the Investor first acquired, or should have first acquired, knowledge of the breach alleged in the Notice of Arbitration and knowledge that the Investor has incurred loss or damage, or one year from the conclusion of the request for local remedies in the domestic court.”[83]

4.2.3.       Fork-In-the-Road Clauses

With the goal of limiting investor access to ISDS and preventing multiple claims, both the CCIA and the SADC Model BIT contain fork-in-the road clauses. Pursuant to Article 28(3) of the CCIA, if the COMESA investor elects to submit a claim at one of the fora set in the Agreement, “that election shall be definitive and the investor may not thereafter submit a claim relating to the same subject matter or underlying measure to other fora.”[84] To submit a claim to Arbitration under the SADC Model BIT, an investor must provide “a clear and unequivocal waiver of any right to pursue and/or to continue any claim relating to the measures underlying the claim made pursuant to this Agreement, on behalf of both the Investor and the Investment, before local courts in the Host State or in any other dispute settlement forum.”[85]

4.3.      Promoting Greater Transparency in ISDS

The CCIA and the SADC Model BIT both opt for greater transparency in ISDS processes. Pursuant to Article 28(5) of CCIA, “[a]ll documents relating to a notice of intention to arbitrate, the settlement of any dispute …, the initiation of an arbitral tribunal, or the pleadings, evidence and decisions in them, shall be available to the public.”[86] Also open to the public are procedural and substantive oral hearings. The SADC Model BIT imposes on State Parties the obligation to make all documents relating to an arbitral claim available to the public.[87] The SADC Model BIT encourages another type of transparency, the transparency of investment information. Each State is obliged to “promptly publish, or otherwise make publicly available, its laws and regulations of general application as well as international agreements that may affect the investments of Investors of the other State Party.”[88] Transparency of investment information could prevent disputes from arising in the first place by providing investors with the type of information they need to make informed business decisions in a timely manner.

4.4.       Encouraging Public Participation Through Amicus Curiae Briefs

Article 28(8) of the CCIA stipulates that “[a]n arbitral tribunal shall be open to the receipt of amicus curiae submissions . . . .”[89] Annex A of the CCIA sets out the process for submitting amicus briefs to the CCIA arbitration. The SADC Model BIT also provides for amicus curiae submissions. Article 29.15 provides that thetribunal “shall have the authority to accept and consider amicus curiae submissions from a person or entity that is not a disputing party.”[90] The procedure regarding amicus curiae submissions are set out in Schedule 4.

4.5.       Expert Reports

The SADC Model BIT provides for use of expert reports in arbitral proceedings. At the request of a disputing party or, on its own initiative subject to the consent of the disputing parties, which consent shall not be unreasonably withheld, a tribunal “may appoint one or more experts to report to it in writing on any factual issue concerning environmental, health, safety or other scientific matters raised by a disputing party in a proceeding, subject to such terms and conditions as the disputing parties may agree.”[91] This provision is clearly an attempt to reduce the margin of discretion of arbitrators. The provision will likely encourage greater interaction between investment arbitrators and experts in other fields.

4.6.       Counter Claims

With the goal perhaps of discouraging investors from rushing to ISDS and leveling the playing field as between investors and host states, the CCIA allows host states to assert counter claims against investors. Article 28(9) of the CCIA provides:

A Member State against whom a claim is brought by a COMESA investor may assert as a defence, counterclaim, right of set off or other similar claim, that the COMESA investor bringing the claim has not fulfilled its obligations under this Agreement, including the obligations to comply with all applicable domestic measures or that it has not taken all reasonable steps to mitigate possible damages.[92]

The SADC Model BIT also permits a Host State to initiate a counter claim against an Investor for damages or other relief resulting from an alleged breach of obligations set out in the agreement.[93] Under the SADC Model BIT, the Host State, private persons, or private organizations may also initiate a civil action in domestic court against the Investor or Investment for damages arising from an alleged breach of obligations set out in the agreement.[94]

4.7.       Conflict of Interest

To date, few BITs concluded by countries in SSA have a Conflict of Interest clause. This issue of conflict of interest is a particular concern for SSA countries given the fact that most of the arbitrators involved in investment arbitration are not from Africa. The SADC Model BIT addresses the problem of possible conflict of interest with arbitrators. Article 29.13 stipulates that arbitrators appointed to resolve disputes must, at all times during the arbitration:

be impartial, free of actual conflicts of interest and an appearance of conflict of interest, and independent of the disputing parties at the time of accepting an appointment to serve and shall remain so during the entire arbitration proceeding until the final award has been rendered or the proceeding has otherwise finally terminated . . . .[95]

Arbitrators are also required to:

disclose to the parties, the arbitration institution or other appointing authority (if any, and if so required by the applicable institutional rules) and to the co-arbitrators, any items that may, in the eyes of a reasonable third person, give rise to doubts as to the arbitrator’s impartiality, freedom from conflicts of interest, or independence.[96]

The SADC Model BIT also prohibits arbitrators from acting concurrently as counsel in another actual or potential treaty-based arbitration involving a foreign investor and a State.[97]

4.8.       Encouraging Coherence in Investment Policy

In most of the BITs that SSA countries have concluded, there is no attempt to ensure coherence between the obligations assumed under the BITs and the obligations assumed under other international agreements. The CCIA departs from this trend. Article 32(1) states that the CCIA or any action taken under it “shall not affect the rights and obligations of the Member States under existing agreements to which they are parties.”[98] With respect to future agreements that Member States may conclude, the CCIA is more conservative, however.[99]

What happens to existing BITs that Member States have concluded, BITs that are clearly inconsistent with the CCIA? The CCIA falls short of mandating Member States to bring their existing treaties into compliance with the agreement. Article 32(5) merely states that “[w]here Member States have an international investment agreement with a third party, they shall strive to renegotiate that agreement to make it consistent with the present Agreement.”[100]

4.9.       Limiting Multiplicity of Claims; Consolidation of Arbitrations

Multiplicity of claims, divergent jurisprudence, inconsistency in arbitral awards, and cost of arbitral proceedings are all matters of grave concern for countries in SSA given their limited resources and limited expertise in the area of international investment law. The CCIA and the SADC Model BIT both introduce mechanisms for consolidation of related claims.[101] Under the SADC Model BIT, a disputing party may seek an order to consolidate cases, “[w]here two or more claims have been submitted separately to arbitration … and the claims have a question of law or fact in common and arise out of the same underlying measure or measures or circumstances . . . .”[102] According to Article 29, whenever a tribunal established is satisfied that two or more claims that have been submitted to arbitration have a question of law or fact in common and arise out of the same events or circumstances, the tribunal:

may, in the interest of fair and efficient resolution of the claims, and after hearing the disputing parties, by order: (i) assume jurisdiction over, and hear and determine together, all or part of the claims; (ii) assume jurisdiction over, and hear and determine one or more of the claims, the determination of which it believes would assist in the resolution of the others; or (iii) instruct a tribunal previously established … to assume jurisdiction over, and hear and determine together, all or part of the claims.[103]

4.10      Limits on Arbitral Awards

Although the SADC Model BIT addresses awards, it does not address the problem of exorbitant awards or the cost of arbitral proceedings. In general, awards can be made against a Host State or against an Investor in the light of a counterclaim by a State.[104] A tribunal may award, separately or in combination, only monetary damages and any applicable interest and restitution of property.[105] The SADC Model BIT explicitly provides that a tribunal “may not award punitive damages.”[106] What about an award for costs and legal representation fees? The SADC Model BIT provides:

A tribunal established under this Agreement [shall issue an award for costs and legal representation fees for any arbitration where the jurisdiction of the tribunal is denied to the Investor, and] [may] [shall] [shall, unless by special exception there is good reason not to do so] issue an award for costs and legal representation to the disputing party that prevails in the final award.[107].

In conclusion, in the dispute settlement section of the CCIA and SADC Model BIT, countries in Eastern and Southern Africa offer a glimpse of their vision of ISDS. First, both documents suggest that a considerable number of SSA countries do not wish to altogether abandon ISDS as a means of dispute settlement. Second, both documents also suggest that many SSA countries will opt for individually tailored solutions through focused modification of many aspects of the ISDS mechanism.

However, although both the CCIA and SADC Model BIT clearly encourage proactive and tough treaty negotiation posture and a defensive approach in IIAs to preserve domestic regulatory space, very few countries in SSA have taken this important step. The SADC Model BIT is not binding on SADC Member States and, with the exception of South Africa, has not been adopted by any country in the region. Another problem is that the relationship between the SADC Model BIT and the Protocol on Finance and Investment of the Southern African Development Community (Protocol on Investment) is not very clear. Unlike the SADC Model BIT which is not binding, the SADC Protocol is binding having entered into force on April 16, 2010. Article 3 of the Protocol on Investment stipulates that “State Parties shall co-ordinate their investment regimes and cooperate to create a favourable investment climate within the Region as set out in Annex 1.”[108] Annex 1 offers a range of core investment protection and provides for ISDS as a method of resolving investment disputes. The substantive protections in the SADC Protocol are similar to those in traditional BITs and include, fair and equitable treatment (Article 6(1)), protection against expropriation or nationalization (Article 5), and most favored nation treatment (Article 6(2)). Regarding dispute settlement, as already noted, the Protocol on Investment does not abandon the ISDS mechanism. Article 28(1) stipulates:

Disputes between an investor and a State Party concerning an obligation of the latter in relation to an admitted investment of the former, which have not been amicably settled, and after exhausting local remedies shall, after a period of six (6) months from written notification of a claim, be submitted to international arbitration if either party to the dispute so wishes.[109]

The SADC Tribunal was established under the SADC Treaty to ensure and adjudicate on legal aspects of SADC regulations. Although established in 1992 by Article 9 of the SADC Treaty, the SADC Tribunal became operational only in 2005 when its first judges were sworn-in. The mandate, functions, and processes of the SADC Tribunal are addressed in the Protocol on Tribunal that was adopted on August 7, 2000 and entered into force on August 14, 2011.[110] Articles 14 (Basis of Jurisdiction), Article 15 (Scope of Jurisdiction) and Article 18 (Disputes Between Natural or Legal Persons and the Community) of the Protocol on Tribunal address jurisdictional issues. While the SADC Model BIT and the SADC Protocol on Investment both introduce novel features to the ISDS mechanism, the SADC Protocol is less ambitious in a number of respects (See Table 1).

What the differences in the two instruments suggest about the position of SADC Member States regarding possible reform of the ISDS mechanism is not very clear. The more fundamental problem in the SADC region is the fact that while countries in the region espouse a vision of ISDS that prioritizes good governance, transparency, and rule of law, their actions – the failure to implement the SADC Model BIT as well as steps taken to neutralize the SADC Tribunal – tell a different story.[111]

Table 1: SADC Model BIT and SADC Protocol on Investment Compared

SADC Model BIT SADC Protocol on Investment
Acceptance of ISDS
Arbitration Under the ICSID
Arbitration Under the ICSID Additional Facility Rules
Arbitration Under UNCITRAL Rules
Exhaustion of Domestic Remedy √  (and Protocol on Tribunal)
Timeliness of Claims /Statute of Limitation No
Transparency in ISDS No[112]
Amicus Curiae Briefs No
Expert Reports No
Counter Claims No
Consolidation of Claims No
Right to Regulate √  [113]
General Exceptions √  [114]
Specific Exceptions (Expropriation) No
Right to Development Yes[115]
Obligation on Investors Yes[116]

Source: Uche Ewelukwa Ofodile

  1.     Appeal Facility/A Standing International Investment Court

Are SSA countries likely to welcome and embrace the idea of a standing international investment court? Will such a standing court be in the interest of SSA countries? Judged from the level and quality of the participation of SSA countries in the WTO dispute settlement mechanism, there is no reason to believe that SSA countries will support the idea of a standing international investment court or that such a standing tribunal will necessarily benefit these countries. To date, the participation of SSA countries in the WTO dispute settlement mechanism has been dismal. For the most part, SSA countries have participated in the WTO dispute settlement mechanism only as third parties. After nearly twenty years in operation, the situation is that: (i) SSA countries have not participated in any dispute as complainant or respondent; (ii) SSA countries have participated as third parties in only a handful of cases;[117] (iii) compared to other regions, SSA countries have experienced limited participation as panelists; (iv) prior to 2006 there was no Appellate Body Member from sub-Saharan Africa; to date only one person from SSA has served on the Appellate Body; and (v) few African nationals are involved at the highest levels in dispute settlement at the WTO Secretariat.The existence of the WTO dispute settlement mechanism has not addressed the imbalances in the multilateral trading system, has not encouraged the adoption of a development approach to the interpretation of WTO rules, and has not addressed the challenges developing countries experience as far as implementing and enforcing multilateral trade rules.

The idea of a standing international investment court cannot and must not be seriously entertained without considering the successes and failures of the WTO dispute settlement mechanism measured, in part, by the level and quality of the participation of developing countries, particularly the least developed countries, in the system. The WTO dispute settlement mechanism has been frequently adjudged a resounding success despite the dismal performance of LDCs in the system. For example, a 2004 Report by the Consultative Board to the WTO Director General concluded:

By … most measures, the operation of the dispute settlement system in the WTO has been a remarkable success. …It is clear that the Members find it useful to utilise the new system as a tool for enhancing their trade diplomacy and securing solid and reasonably timely responses to practical trade problems.[118]

An international investment court cannot be established without considering how the effectiveness and success of such a tribunal will be measured. Will success be measured strictly by the level of cases resolved and the speed at which cases are resolved? Will success be measured by the level of participation of developing countries, particularly the least developed countries? Will success be measured by the extent to which such a court admits development considerations into the international investment law?Will the presence of an international investment court help address Africa’s marginalization in the international investment law generally? Do countries in SSA have the capacity to participate effectively in the processes and procedures of a standing international investment court? Overall, an international investment court cannot be entertained without examining the complaints SSA countries and other developing countries have regarding the functioning of the WTO dispute settlement mechanism.[119]

  1. Individualized IIA and Other Individualized Approaches: South Africa’s Example

Among SSA countries, South Africa is one of the few countries that has expressed dissatisfaction with BITs generally and is one of the few countries that is taking what appears to be a radical approach to ISDS. Why so few other countries in SSA have not followed South Africa’s lead is an issue that deserves closer study.

6.1.        Comprehensive Review of BITs

In 2009, South Africa initiated a comprehensive review of its BIT program and subsequently announced plans to allow some existing BITs to expire and to stop negotiating BITs in the future. The review was necessitated partly by arbitral proceedings that investors had initiated against South Africa. The review was also necessitated by the perceived need to conduct a comprehensive risk assessment. Based on interviews conducted, the Department of Trade and Industry found that there was “a lack of understanding regarding the real nature and consequences of BITs” back in the 1990s when many of the country’s BITs were concluded. The specific findings and conclusions of the Department of Trade and Industry suggest that when it comes to reforming the ISDS system, the starting point for most countries in Africa is a comprehensive review of existing BITs and an assessment of each country’s experience with the ISDS system. First, the Department of Trade and Industry found that no policy informed prior BIT negotiations. According to a Government Position Paper:

In several instances, it was pointed out that the conclusion of the BITs were historical … and that no policy documentation informing the rationale for the conclusion of such BITs could be found…. There seems to have been no legal or economic analysis of the risk associated with the conclusion of BITs.[120]

Second, the Department of Trade and Industry found that BITs were negotiated blindly without individualized assessment of risks and benefits associated with negotiating an investment agreement with a given partner. Indeed, “no coordinated policy exist[ed] with regard to outward FDI policy.”[121] According to the Department of Trade and Industry:

In many instances, officials are of the view that bilateral relations were forged in the absence of a policy framework. Further, it has been noted that countries are not individually analysed with a view to determining what the most appropriate forms of cooperation would be. As a matter of course a generic mix of agreements is often proposed, very often resulting in a plethora of agreements in a variety sectors involving more than one government department in the RSA. It is also clear that there does not appear to be sufficient co- ordination across all levels of government ensuring that there is a streamlined focus in relation to RSA’s international relations.[122]

Third, based on the review that South Africa carried out, the Department of Trade and Industry concluded that the BITs that the country concluded were stacked against South Africa:

While it was understood that the democratically elected government of the time had to demonstrate that the RSA was an investment friendly destination, the impact of BITs on future policies were not critically evaluated. As a result, the Executive entered into agreements that were heavily stacked in favour of investors without the necessary safeguards to preserve flexibility in a number of critical policy areas.[123]

Finally, Department of Trade and Industry also concluded that South Africa’s BITs were signed without adequate knowledge of international investment law. According to the Government Position Paper:

In reviewing the travaux preparatoires of the various BITs entered into at the time, it became apparent that the inexperience of negotiators at that time and the lack of knowledge about investment law in general resulted in agreements that were not in the long term interest of the RSA.[124]

Most countries in Africa have never carried out a review of their BITs. This is a mistake and a problem. Without reviewing their BITs and reviewing the level and quality of their previous involvement in the ISDS system, it is quite impossible for these countries to contribute meaningfully in current debates regarding the functioning of the ISDS system.

6.2.       ISDS Abandoned: South Africa’s Proposed Investment Act

On October 29, 2013, Mr. Pravin Gordhan, Acting Minister of Trade and Industry, in South Africa, published the Promotion and Protection of Investment Bill (“Act”), for broader public comments.[125] The broad aims of the Act are to “promote and protect investment in a manner that is consistent with public interest and a balance between the rights and obligations of investors,”[126] and to ensure the equal treatment between foreign investors and South African citizens[127] The Act is firmly grounded in South Africa’s Constitution. Article 2 provides that the “Act must be interpreted and applied with due regards to . . . (a) the Constitution; (b) international law consistent with the Constitution; (c) customary international law consistent with the Constitution; and (d) any other relevant convention or international agreement to which [South Africa] is or becomes a party.”[128] The Act applies only to “investment made for commercial purposes”[129] and applies “irrespective of whether the source of the investment is either public or private sector, or from a domestic or foreign source.”[130]

In the Act, there is a clear attempt to preserve the policy space of the South African government. Section 10 is devoted to addressing the “Sovereign right to regulate in the public interest.”[131] Certain governmental actions are explicitly immunized including: (i) existing taxation legislation measures; (ii) defined governmental subsidies and grants; (iii) government procurement processes; (iv) existing or future custom union, free trade, common markets, and similar international agreements; (v) special advantages that the government accords development finance institutions established for the purposes of development assistance or the development of small and medium businesses or new industries.[132]

To enjoy the protection offered by the Act, investment must be “made in accordance with applicable legislation”[133] and must have been “acquired and used in the expectation, and for the purpose, of economic activity or other business purposes.”[134] For avoidance of doubt, Article 5(3) states that the protection of foreign investment “is subject to compliance with applicable domestic legislation and international agreements.”[135]

In terms of the substantive rights accorded investors, the Act offers national treatment protection,[136] security of investment,[137] protection against expropriation,[138] and right to transfer funds.[139] What sets the Act apart from traditional BITs that SSA countries concluded in the past is the effort made to clearly define the scope of the rights of investor and to avoid ambiguities. Another difference between the Act and traditional BITs is the effort made to preserve the policy space of the South African government.

National treatment protection is available to a foreign investor and foreign investment provided the investments are held in accordance with applicable law.[140] A determination of “like circumstance,” one of the core elements of the national treatment protection, requires a case-by-case analysis taking into account four factors: “(a) The effect of the foreign investment on [South Africa] …; (b) the sector that the foreign investment is in; (c) the aim of any measure relating to foreign investments; and (d) other factors relating to the foreign investor or the foreign investment in relation to the measure concerned.”[141]

Evident in the Act is a clear attempt to avoid controversial obligations such as the “full protection and security” obligation and the “fair and equitable treatment” obligation. The Act replaces these obligations with one “Security of Investment” obligation. The Security of Investment clauses places foreign investors on an equal footing as other investors.[142] Furthermore, the Security of Investment protection is “subject to available resources and capacity.”[143]

With regards to dispute resolution, the Act departs from traditional BITs in many respects. First, the Act abandons a fundamental feature of the ISDS mechanism – allowing foreign investors to resort to international arbitration. While investors may still bring claims directly against the South African government, such claims cannot be taken before an international tribunal. Second, the Act prioritizes alternative methods of dispute resolution, particularly mediation. A foreign investor whose rights have been affected by a governmental act or measure “may request the Department or any other competent authority to facilitate the resolution of such dispute by appointing a mediator or other competent body.”[144] In this regard, the Minister is required to make regulations on the processes and procedures relating to alternative methods of dispute settlement. Third, under the Act, investors have the option of referring investment disputes to arbitration in accordance with the Arbitration Act, 1965 (Act No. 42 of 1965).[145]

6.3.       Learning from South Africa

Although the South African government has not expressed a plan to abandon ISDS as a means of resolving investment disputes, the Act clearly introduces radical changes to South Africa’s investment policy regime. The plan is that the Act will ultimately come to replace South Africa’s existing BITs.

In the BITs that they are presently concluding, most other countries in SSA are not adopting defensive approaches to preserve domestic regulatory space and are not changing their traditional approach to ISDS. The question is why? Why have so few countries in SSA followed South Africa’s lead? There are several possible explanations for the hesitant, arguably inconsistent, position of countries in SSA when it comes to ISDS. First is the belief that a departure from the traditional approach to ISDS is not really an option given weak domestic judicial systems. Second is the perception, perhaps justified, that it is unrealistic at the present time to focus on improving regulatory, enforcement and dispute resolution institutions. Third, the ISDS arguably offers a cover to corrupt governments in Africa – governments that are not interested in improving domestic institutions and are served by weak and fragile regulatory frameworks. Fourth is political pressure from powerful external partners and multinational corporations – pressure that many governments in Africa apparently are not able to withstand. Fifth is resource constraints and lack of expertise in international investment law. South Africa’s present approach to the ISDS calls for a level of expertise that many other countries in Africa lack.

Even if other countries in SSA do not follow the path that South Africa has chosen, there are three important lessons these countries can learn from South Africa. First, the starting point for every country must be a careful and comprehensive review of all BITs concluded in the past as well as BITs that are currently under negotiation. Second, a comprehensive assessment of each country’s previous participation in the ISDS system and experience with the system is critical. What has been each country’s experience with the ISDS as respondents and as arbitrators and conciliators in arbitral proceedings? Third, for each country in SSA, open and public discussion about the country’s BIT policy is crucial.

  1.    Africa and the ISDS: A Forward-Looking Agenda

Going forward, countries in SSA must revisit their long-standing opposition to the idea of a multilateral investment treaty. In addition, these countries must focus attention on developing credible domestic judicial and arbitral institutions and building capacity in the area of international investment law and arbitration. Regarding the need for strong domestic and regional institutions, the demise of the SADC Tribunal in the wake of Mike Campbell (Pvt) Ltd and Others v. Republic of Zimbabweundermines efforts to project domestic and regional institutions in Africa as credible alternatives to international arbitration.

7.1.     A Multilateral Investment Treaty?

The current patch-work of BITs has not worked to the advantage of countries in Africa. Nevertheless, SSA countries appear unable or unwilling to negotiate BITs that are in their interest – BITs that strike a balance between the interest of investors and those of host countries. Nigeria offers an interesting case study. Many of the country’s BITs are not publicly available, stakeholders are rarely involved in the country’s BIT negotiations, and there are noticeable gaps and inconsistencies in content and coverage of existing BITs suggesting a country unable to manage a multifaceted, overlapping and complex web of rules. Given the problems with existing BITs, SSA countries may wish to reevaluate their long-standing opposition to the idea of a multilateral investment treaty?

In documents such as the Declaration on the Fifth Ministerial Conference of the WTO,[146] the Mauritius Ministerial Declaration on the Fifth Ministerial Conference of the WTO,[147] the Dhaka Declaration,[148] and in the African Union’s Ministerial Declaration on EPA Negotiations,[149] countries in Africa took the position that the Singapore issues, including the issues of investment, should remain outside the ambit of the WTO Doha Work Program. Faced with the challenges associated with managing a growing and very complex and multi-faceted network of BITs, the time is ripe for countries in SSA to review their past resistance to the idea of a multilateral investment treaty.

Assuming SSA countries and other developing countries agree to a multilateral treaty on investment, what are the chances that such a treaty will reflect in a balanced manner the interests of home and host countries? Paragraph 22 of the Doha Ministerial Declaration adopted in 2001 makes room for the emergence of a balanced investment treaty.[150] According to Paragraph 22:

Any framework should reflect in a balanced manner the interests of home and host countries, and take due account of the development policies and objectives of host governments as well as their right to regulate in the public interest. The special development, trade and financial needs of developing and least-developed countries should be taken into account as an integral part of any framework, which should enable members to undertake obligations and commitments commensurate with their individual needs and circumstances. Due regard should be paid to other relevant WTO provisions. Account should be taken, as appropriate, of existing bilateral and regional arrangements on investment.[151]

A multilateral treaty on investment could serve African countries better than the current patchwork of BITs but only if such a treaty is balanced in terms of reflecting the interest of home and host countries and encouraging sustainable development more broadly.

7.2.     Credible Domestic and Regional Judicial/Arbitral Mechanisms

The approach of SSA countries to reforming the ISDS system, particularly approaches that project domestic and regional institutions as credible alternatives to international arbitration, cannot be taken seriously if domestic and regional institutions are weak or perceived to be weak. In this regard, countries in SSA must strive to improve the capacity of local judges to settle investment disputes and must strive to make Africa an attractive venue to arbitrate cases.[152] For Africa to emerge as a credible investment/commercial arbitration center, a myriad of legal, policy, institutional, and infrastructure problems will need to be addressed. Most important, the issues surrounding the demise of the SADC Tribunal must be resolved. Under SADC’s Protocol on Investment, the SADC Tribunal was one of the fora before which an investor may refer a dispute.[153] Today, the option of referring investment disputes to the SADC Tribunal no longer exists. Since 2010, the SADC Tribunal has been in limbo – a consequence of the Tribunal’s decision in the case of Mike Campbell (Pvt) Ltd and Others v. Republic of Zimbabwe.[154] The effect of the Campbell saga on the effort to make regional institutions in Africa viable avenues for resolving investment dispute is yet to be fully analyzed. Arguably, the demise of the SADC Tribunal in the wake of Campbell has dealt a serious blow to the efforts of countries in SSA to consolidate good governance in Africa and offer credible domestic and regional alternatives to international arbitration.

In decisions reached in 2007 and 2008 in Campbell, the SADC Tribunal concluded that Applicants (79 white commercial farmers in Zimbabwe) who had been evicted from their lands as part of Harare’s land reform programme had been discriminated against on the ground of race. The SADC Tribunal also held that fair compensation was payable to the Applicants for their lands compulsorily acquired by the government of Zimbabwe. Zimbabwe objected to both the jurisdiction and the ruling of the Tribunal, ignored the decision of the SADC Tribunal, and took steps to ensure that the Tribunal was effectively neutralized. First, Zimbabwe pulled out of the SADC Tribunal claiming that the Tribunal has not been properly constituted and that the country will no longer take part in, or respect, any decisions from the Tribunal.[155] Next, Harare, with the support of SADC Member States, gradually dismantled the SADC Tribunal.

In 2010, at the Summit of Heads of State and Government of the SADC (Summit)[156] held in Windhoek, Republic of Namibia from August 16 – 17, the SADC Summit decided that “a review of the role functions and terms of reference of the SADC Tribunal should be undertaken and concluded within 6 months.”[157] In 2011, at the Extraordinary Summit of SADC Heads of State and Government held in May, SADC Heads of State and Government “mandated the Ministers of Justice/Attorneys General to initiate the process aimed at amending the relevant SADC legal instruments and submit a progress report in August 2011 and a final report to Summit in August 2012.”[158] Furthermore the Summit: (a) decided “not to reappoint members of the Tribunal whose term of office expired on August 31, 2010;”[159] (b) decided “not to replace members of the Tribunal whose term of office will expire on October 31, 2011;”[160] and (c) “reiterated the moratorium on receiving any new cases or hearings of any cases of the Tribunal until the SADC Protocol on the Tribunal has been reviewed and approved.”[161]

The final blow came in 2012 when the Summit decided to strip the Tribunal of its mandate to hear cases brought by individuals. At the 32nd Session of the Summit of the Heads of State and Government of SADC held in Maputo, Republic of Mozambique on 17th and 18th August 2012, the Summit resolved that “a new Protocol on the [SADC] Tribunal should be negotiated and that its mandate should be confined to interpretation of the SADC Treaty and Protocols relating to disputes between Member States.”[162]Today, the Tribunal remains in Limbo despite a recent decision of the South African Constitutional Court upholding the decision of the High Court in Pretoria to attach Zimbabwean government property in South Africa in order to enforce the costs order made by the SADC Tribunal in Campbell.[163] In November 2013, President Zuma hinted that work was underway to establish a new framework for resolving disputes within the SADC Bloc.[164] However, when a revamped Tribunal will become operational is not clear.

The steps taken by the SADC Summit to dismantle the SADC Tribunal has been widely condemned. Regardless of the merits of the applicant’s case in Campbell, there is broad consensus that the Summit went overboard in responding to the situation. It is important that SADC Heads of State and Government consider the broader implications of any decision they take about the future of the SADC Tribunal. As Chief Judge of the South African Constitutional Court, Mogoeng CJ, rightly notes:

For the right or wrong reasons, or a combination of both, Africa has come to be known particularly by the western world as the dark continent, a continent which has little regard for human rights, the rule of law and good governance. Apparently driven by a strong desire to contribute positively to the renaissance of Africa, shed its southern region of this development-inhibiting negative image, coordinate and give impetus to regional development, Southern African States established the Southern African Development Community (SADC) with special emphasis on, among other things, the need to respect, protect and promote human rights, democracy and the rule of law. To ensure that no SADC Member State is able to undermine the regional development agenda by betraying these noble objectives with impunity, a regional Tribunal (Tribunal) was created to entertain, among other issues, human rights related complaints particularly by citizens against their States.[165]

7.3.       Common African Position on Bilateral Investment Treaties and ISDS

African countries must explore the possibility of developing a common African position on FDI and international investment rule-making more generally. Such a move is already underway in other regions.[166] A coordinated African voice on FDI would likely enhance the continent’s global competitiveness, prevent destructive competition among countries, help strengthen Africa’s position in investment agreements, and ultimately result in increased FDI flows to the continent. Colin Coleman, managing director of Goldman Sachs’ South African office, makes the case for a code of foreign direct investment conduct in Africa. He asks: “Is there a case for an ‘FDI in Africa code of conduct’ that should be thought about, articulated, marketed, popularized, bought into and owned by investors, countries, and communities alike.”[167]

7.4.       Capacity-Building

Lack of knowledge about international investment law and investment arbitration poses a major challenge for countries in SSA that wish to restructure their BIT program, participate more meaningfully in the ISDS system, promote ADR as a means for settling investment disputes, tailor the existing system through individual IIAs, and/or limit investor access to ISDS. If and when an appeal facility is introduced or a standing international investment court is established, lack of capacity and expertise will also limit the participation of SSA countries in both mechanisms. As part of its BIT review, South’s Africa’s Department of Trade and Industry found that “the inexperience of negotiators … and the lack of knowledge about investment law in general resulted in agreements that were not in the long term interest of the RSA.” Countries in Africa will need to ramp up efforts for building domestic and regional capacity in the field of international investment law.

  1. Suggestions for Further Research

This paper raises more questions than it answers. More empirical work is needed to understand the experiences of countries in SSA with the ISDS mechanism and to understand their position as far as reforming the mechanism is concerned. There is also a need to better understand why SSA countries appear willing to introduce changes to the ISDS mechanism at the regional level but have generally refrained from calling for radical changes to the international mechanism. Finally, there is a need to better understand why the reform initiatives at the regional level have not been carried to completion. For example in the SADC region, with the exception of South Africa, no country has taken steps to model their BIT after the model set out in the SADC Model BIT. Within COMESA, the CCIA appears to be all but abandoned.

More sustained and empirical work is needed to fully understand: (i) the precise concerns of states in Africa have regarding the functioning of the ISDS; (ii) the reasons why SSA countries appear unable or unwilling to participate in on-going debate regarding the functioning of the ISDS; (iii) the reasons for the limited participation of civil society groups in Africa in on-going discussions about the ISDS system; (iv) the reasons why so few countries in the region are taking steps to change their traditional approach to ISDS and BITs more generally; (vi) the reasons why countries in the region are more willing and able to negotiate “balanced” IIAs with one another but are incapable of doing the same with external partners; and (vii) the strength of ADR laws and institutions in SSA countries, including the ease of initiating and conducting arbitration as well as the ease of recognition and enforcement of foreign arbitral awards.

There are a number of questions that can only be answered with more focused research. Questions such as:

  • Why do SSA countries resist the idea of a multilateral investment treaty but continue to negotiate BITs that appear to be at odds with public interest and fail to achieve a balance between the rights and obligations of investors?
  • Why is the CCIA not in force more than six years after it was adopted? What are the prospects that the agreement will be revived as is or in a revamped form? Why have COMESA countries all but abandoned the CCIA after devoting considerable time and resources to the development of the instrument?
  • Why has no country in the SADC region taken active steps to adopt the prescriptions set out in the SADC Model BIT?
  • What is the perception of academics and civil society groups in Africa regarding the ISDS system and the performance of African states in the system?
  • What accounts for the limited participation of civil society groups in Africa in on-going discussions about the ISDS system?
  • Compared to investors from Europe and North America, Chinese investors have generally refrained from initiating claims against SSA countries. To date, no single investment dispute has been brought by a Chinese investor against a country in SSA. Why? Does this suggest a tendency for both sides to consider and utilize ADR mechanisms in resolving disputes?
  • What capacity-related constraints prevent SSA countries from taking a more defensive oriented approach towards IIAs and from tailoring their BITs? What steps are countries taking, individually as well as collectively, to address capacity-related problems and challenges?

Although the CCIA and the SADC Model BIT offer useful insights into the position of SSA countries regarding the functioning of the ISDS system, there is much about the CCIA and the SADC Model Treaty that is not known. The travaux preparatoire of both the CCIA and the SADC Model BIT are not readily available making it difficult to understand the history and evolution of the two instruments. Without access to the respective travaux preparatoire it is difficult to know what promoted each instrument, how involved SSA countries were in the development of the instruments, or the reasoning that informed the different articles. Furthermore, it is not clear how the two instruments came into being or what role, if any, stakeholders in Africa played in the development of the two instruments. The demise of the SADC Tribunal offers a glimpse into the problems that arise when forward-looking institutions are not homegrown and domestic constituencies in Africa are not involved in the initial conception and development of such institutions.

  1. Conclusions

Given the history of colonialism and imperialism, the fact that countries in Africa did not participate in the initial development of international investment law and are not active participants as arbitrators in the ISDS system, and the fact that an increasingly number of ISDS claims are brought against developing countries, SSA countries should be leading the discussion about possible reform to the ISDS system. Unfortunately, this is not the case. However, developments at the regional level, particularly in Eastern and Southern Africa, offer a glimpse into the type of investment dispute settlement mechanism that some countries in SSA would prefer. An examination of the CCIA, the SADC Model BIT, and even the SADC Protocol on Investment suggest that countries in Eastern and Southern Africa would like to see many features of the ISDS system modified but do not wish to completely abandon ISDS as a dispute settlement mechanism.

The limited participation of nationals of SSA countries in investment arbitration as arbitrators, conciliators and ad hoc Committee Members is a major concern and deserves closer scrutiny. Limited participation as arbitrators, conciliators and ad hoc Committee Members places SSA countries on the margins of the international investment law regime. Given their limited participation, SSA countries are not contributing to the development of jurisprudence in the field, are not seizing the opportunity that arbitration presents to “fill gaps” in BITs, and are missing out on the opportunity to shape obligations and develop interpretations of investment treaties that are supportive of development objectives.

Ultimately, the CCIA, the SADC Model BIT, the SADC Protocol on Investment, and the dismantling of the SADC Tribunal expose a continent still struggling to find a foothold in a fast-globalizing world. On the one hand, countries in Africa have by and large accepted and even embraced the wisdom of market-based development. On the other hand, the same countries are ill-equipped to impose necessary regulations on market actors. The CCIA and the SADC Model BIT offer useful but limited insight into the position of SSA countries regarding the functioning of the ISDS system. While the CCIA and the SADC Model BIT suggest Africa is a continent with an ambitious agenda for reforming the ISDS, actions on the ground suggest Africa is a continent that is sidelined, marginalized and unable or unwilling to participate meaningfully in the international investment law regime generally.

 * SJD (Harvard), Professor, University of Arkansas School of Law.

[1] The Common Market for Eastern and Southern Africa, Investment Agreement For The COMESA Common Investment Area, May 22-23, 2007 [hereinafter CCIA], available at http://vi.unctad.org/files/wksp/iiawksp08/docs/wednesday/Exercise%20Materials/invagreecomesa.pdf. See also The Common Market for Eastern and Southern Africa, http://about.comesa.int/ (last visited Jan. 1, 2014).

[2] South African Development Community, SADC Model Bilateral Investment Treaty Template with Commentary, July 2012 [hereinafter SADC Model BIT], available at http://www.iisd.org/itn/wp-content/uploads/2012/10/SADC-Model-BIT-Template-Final.pdf. See also South African Development Community, http://www.sadc.int/ (last visited Jan. 3, 2014).

[3] See M. Sornarajah, A Coming Crisis: Expansionary Trends in Investment Treaty Arbitration, in APPEALS MECHANISM IN INTERNATIONAL INVESTMENT DISPUTES 39–45 (Karl P. Sauvant & Michael Chiswick-Patterson ed., 2008);Charles N. Brower, A Crisis of Legitimacy, 26 Nat’l L.J., B9 (Oct. 7, 2002);Susan D. Franck, The Legitimacy Crisis in Investment Treaty Arbitration: Privatizing Public International Law Through Inconsistent Decisions, 73 Fordham L. Rev. 1521 (2005); Charles N. Brower et al., The Coming Crisis in the Global Adjudication System, 19 Arb. Int’l 415 (2003).

[4] For example, in May 2013, Ecuador’s President, President Correa, by decree established the Commission for the Citizen’s Audit of Reciprocal Investment Protection Treaties and the International Investment Arbitration – COTITSA. The mandate of the Audit Commission is to study and propose alternatives to investment treaties. Although Ecuador denounced a good number of its BITs in 2008, it is reported that the Ecuadorian National Assembly will start voting on the termination of Ecuador’s remaining BITs soon. See Decree No. 1506, May 6, 2013 (Ecuador) (creating the Commission for the Citizen’s Audit of Reciprocal Investment Protection Treaties and the International Investment Arbitration – COTITSA), available at http://www.arbitrajecomercial.com/BancoMedios/Stop. .rticle lopment Community,er needjournal has been published Archivos/decreto_1506_2013. pdf. See Venezuela officially withdraws from Icsid, El Universal (Jan. 25, 2012), http://www.eluniversal.com/economia/120125/venezuela-officially-withdraws-from-icsid; Nicolas Boeglin, Argentina: towards a possible new withdrawal from the ICSID?, The Committee for the Cancellation of the Third World Debt (Cadtm) (May 4, 2012), http://cadtm.org/Argentina-towards-a-possible-new; See Sébastien Manciaux, Bolivia’s withdrawal from ICSID, TDM 5 (2007), http://www.transnational-dispute-management.com/article.asp?key=1076.

[5] Austl. Gov’t, Dep’t. of Foreign Affairs & Trade, Gillard Government Trade Policy Statement: Trading our way to more jobs and prosperity (April 2011), available at http://www.dfat.gov.au/publications/trade/trading-our-way-to-more-jobs-and-prosperity.pdf. The Department for Industrial Policy and Promotion in India has called for a review of all of the BITs that India has signed (82 in all). See Govt to review bilateral treaties to avoid legal battle with telcos, The Indian Express (April 13, 2012), http://www.indianexpress.com/news/govt-to-review-bilateral-treaties-to-avoid-legal-battle-with-telcos/936228/.

[6] See generally Uche Ewelukwa Ofodile, China-Africa Bilateral Investment Treaties: A Critique, Mich. J. int’l L.…. (forthcoming 2014). See also News Release, Sao Tome and Principe Ratifies the ICSID Convention, ICSID News Release (May 21, 2013), https://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=OpenPage&PageType=AnnouncementsFrame&FromPage=Announcements&pageName=Announcement130.

[7] Republic of S. Afr., Bilateral Investment Treaty Policy Framework Review: Government Position Paper (June 2009) [hereinafter S.A. BIT Policy Framework Review], available at http://www.pmg.org.za/ files/docs/091006bit1.doc.

[8] On June 23, 2013, South Africa served a notice of termination in respect of its BIT with Spain; this BIT will terminate on December 23, 2013 at the expiration of the 6 months’ notice called for in the agreement.

[9] On October 29, 2013, South Africa’s acting Minister of Trade and Industry published the Promotion and Protection Investment Bill (PPI Bill), for broader public comments. If passed, the BPI Bill will eventually replace South Africa’s existing BITs. See Promotion and Protection Investment Bill, 2013, General Notice 1087 in GG36995 of 1 Nov. 2013 (S. Afr.) available at http://www.greengazette.co.za/documents/national-gazette-36995-of-01-november-2013-vol-581_20131101-GGN-36995.pdf.

[10] South African Development Community, The Protocol on Finance and Investment of the Southern African Development Community, Aug. 18, 2006, [hereinafter Protocol on Investment], available at http://www.sadc.int/files/4213/5332/ 6872/Protocol_ on_Finance__Investment2006.pdf.

[11] UNCTAD, Reform of Investor-State Dispute Settlement: In Search of a Roadmap, IIA Issue Note No. 2 (June 2013), available athttp://unctad.org/en/PublicationsLibrary/webdiaepcb2013d4_en.pdf.

[12]See UNCTAD, World Investment Report 2012: Towards a New Generation of Investment Policies, UNCTAD/WIR/2012, available at http://www.unctad-docs.org/files/ UNCTADWIR2012-Full-en.pdf at 139; See also UNCTAD, Towards a New Generation of International Investment Policies: UNCTAD’s Fresh Approach to Multilateral Investment Policy-Making, IIA Issues Note No. 5 (July 2013), available at http://unctad.org/en/PublicationsLibrary/webdiaepcb2013d6_en.pdf.

[13] Global Agenda Council on Global Trade and FDI, Foreign Direct Investment as a Key Driver for Trade, Growth and Prosperity: The Case for a Multilateral Agreement on Investment(2013), available at http://www3.weforum.org/docs/ GAC13/WEF_GAC_GlobalTradeFDI_FDIKeyDriver_Report_2013.pdf.

[14] South Africa, Angola, Djibouti, Eritrea, Equatorial Guinea, and Libya have neither signed nor ratified the ICSID Convention.

[15] Biwater Gauff (Tanzania) Ltd. v. Tanzania, ICSID Case No. ARB/05/22, Award, (July 24, 2008)(involving water and sewage management), http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc& docId=DC1589_En&caseId=C67.

[16]Piero Foresti, Laura de Carli & Others v. The Republic of South Africa,ICSID Case No. ARB(AF)/07/01, Award, (Aug. 4, 2010), available at, http://icsid.worldbank.org/ICSID/FrontServlet?requestType=CasesRH&actionVal=showDoc& docId=DC1651_En&caseId=C90.

[17] International Centre for the Settlement of Investment Disputes, The ICSID Caseload – Statistics (Issue 2013-2) 11 (2013) [hereinafter The ICSID Caseload – Statistics], available at https://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=ShowDocument&CaseLoadStatistics=True&language=English. What about cases registered with arbitral bodies other than the ICSID? There is not much known regarding the level of involvement of African States in mechanisms other than the ICSID. SSA countries do not routinely release information regarding their involvement in these other cases.

[18] Id. at 26.

[19] Id.

[20] Id.

[21] The participation of SSA countries is dismal compared to those of countries in Western Europe (47%), North America (21%) and even South America (11%). Id. at 18.

[22] Id. at 20.

[23] S.A. BIT Policy Framework Review, supra note 7, at 10.

[24]S.A. BIT Policy Framework Review, supra note 7.

[25]Member States of COMESA are: The Governments of Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. See The Common Market for Eastern and Southern Africa, http://about.comesa.int/ (last visited Jan. 1, 2014).

[26] See Article 159 of the Treaty Establishing COMESA; the COMESA Free Trade Area (FTA) launched on October 31, 2000; and documents from the Third COMESA Summit held on June 29, 1998 in Kinshasa, Democratic Republic of Congo, to establish the COMESA Common Investment Area.

[27] CCIA, supra note 1, at 1.

[28] About SADC,South African Development Community, http://www.sadc.int/about-sadc/overview/ (last visited Jan. 4, 2014).The precursor to SADC was the Southern African Development Coordinating Conference (SADCC) which was established on April 1, 1980. Id.

[29]SADC members are Angola, Botswana, DR CongoLesotho, MadagascarMalawi, Mauritius, Mozambique, Namibia, Seychelles, South AfricaSwaziland, Tanzania, Zambia and Zimbabwe. Id.

[30] Treaty of the Southern African Development Community art. 5(1)(a), Aug. 17, 1992, 32 I.L.M. 116, available at http://www.sadc.int/files/9113/5292/9434/SADC_Treaty.pdf.

[31] Id. at art. 5(2)(a).

[32] Id. at art.16(1).

[33] Substantial business activity is stated to require “an overall examination, on a case-by-case basis, of all the circumstances, including, inter alia: (a) the amount of investment brought into the country; (b) the number of jobs created; (c) its effect on the local community; and (d) the length of time the business has been in operation.” CCIA, supra note 1, at 2.

[34] Id. at 3.

[35] Id.

[36] Id. at art. 14.

[37] Id. at art. 14(2).

[38] Id. at art. 14(3).

[39] Id. at art. 18.

[40] Id. at art. 17(2) (a)-(f).

[41] See SADC Model BIT, supra note 2,art. 4 (Non-Discrimination), art. 5 (Fair and Equitable Treatment), and art. 6 (Expropriation).

[42] Id. at art. 29, p. 69.

[43] CCIA, supra note 1, at art. 10.

[44] Id. at art. 12(2).

[45] See infra, Section 5.

[46] CCIA, supra note 1, at art. 11.

[47] Id. at art. 13.

[48] See generally SADC Model BIT, supra note 2.

[49] Id. at art. 19.1.

[50] There are exceptions to this broad statement. Some BITs that some countries have concluded do indeed provide for general exceptions. For example, the BIT between Nigeria and Finland has a General Exception clause (Article 14) and so does the BIT between Nigeria and Turkey.

[51] CCIA, supra note 1, at art. 22(1). Article 22(2) states: “Nothing in this Agreement shall be construed to prevent a Member State from adopting, maintaining or enforcing any measure that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to the principles outlined in sub-paragraphs 1(a) to (c) ….” Id. at art. 22(2).

[52] Id. at art. 22(3)(a).

[53] SADC Model BIT, supra note 2, at art. 25.1. In addition to the grounds covered in Article 22(1) of the CCIA, the SADC Model BIT also covers “measures taken in good faith and designed and applied . . . for the conservation of living or non-living exhaustible natural resources.” Id. at art. 25.1(c).

[54] Id. at art. 25.3.

[55] Id. at art. 25.5.

[56] Id. at art. 25.4. This particular exception does not affect a State Party’s obligations with regards to the repatriation of assets.

[57] CCIC, supra note 1, at art. 20(6). A similar provision appears in the SADC Model BIT. See SADC Model BIT, supra note 2. at art. 6.5.

[58] CCIC, supra note 1, at art. 20(8). A similar provision appears in the SADC Model BIT. See SADC Model BIT, supra note 2, at art. 6.7.

[59] See SADC Model BIT, supra note 2, at art. 6.1(c).

[60] Id. at art. 6.2 (Option 1) and art. 6.2 (Option 2).

[61] The six factors are: (1) the current and past use of the property; (2) the history of its acquisition; (3) the fair market value of the investment; (4) the purpose of the expropriation; (5) the extent of previous profit made by the foreign investor through the investment, and (6) the duration of the investment. Id. at art. 6.2 (Option 2).

[62] The General Agreement on Tariff and Trade, Article XIX; The Agreement on Safeguards of the World Intellectual Property Organization.

[63] CCIA, supra note 1, at art. 24(1).The CCIA leaves the task of determining what constitutes serious injury and threat of serious injury and the procedures of instituting emergency safeguard measures to the CCIA Committee. Id. at art. 23(3).

[64] SADC Model BIT, supra note 2, at art. 20.1.

[65] Id. at art. 21.1.

[66] Id. at art. 21.2(a).

[67] Id. at art. 21.2(b).

[68] Id. at art. 21.3.

[69] The Drafting Committee of the SADC Model BIT expressed the view that “the preferred option is not to include investor-State dispute settlement.” See Id. at art. 29.

[70] See SADC Model BIT, supra note 2, at art 29.6 compare with CCIA, supra note 1, at art. 28.

[71] CCIA, supra note 1, at art. 28(1)(a).

[72] Id. at art. 28(1)(b).

[73] Id. at art. 28(1)(c)(iv).

[74] SADC Model BIT, supra note 2, at art. 29.6(d/e).

[75] CCIA, supra note 1, at art. 26(4) (emphasis added).

[76] Id. at art. 26(5).

[77] Id.

[78] Id. at art. 26(6).

[79] SADC Model BIT, supra note 2, at art. 29.3

[80] Id. at art. 29.4(b)(i).

[81] Id. at art. 29.4(b)(ii).

[82] CCIA, supra note 1, at art. 28(2).

[83] SADC Model BIT, supra note 1, at art. 29.4(d).

[84] CCIA, supra note 1, at art. 28(3).

[85] SADC Model BIT, supra note 2, at art. 29.4(c).

[86] CCIA, supra note 1, at art. 28(5).

[87] SADC Model BIT, supra note 2, at art. 29.17(a). Concerns about disclosure of confidential information are addressed in Article 29.17(c) and (d).

[88] Id. at art. 24(1).

[89] CCIA, supra note 1, at art. 28(8).

[90] SADC Model Bit, supra note 2, at art. 29.15.

[91] Id. at art.29.16.

[92] CCIA, supra note 1, at art. 28(9).

[93] SADC Model BIT, supra note 2, at art. 19.2.

[94] Id. at art. 19.3.

[95] Id. at art. 29.13.

[96] Id. at art. 29.13(b).

[97] Id.

[98] CCIA, supra note 1, at art. 32(1).

[99] CCIA, supra note 1, Article 32(3). The CCIA states that “Nothing in this Agreement shall affect the rights of the Member States to enter into other agreements not contrary to the principles, objectives and terms of this Agreement.” Id. at art. 32(2). “In the event of inconsistency between this Agreement and such other agreements between Member States mentioned in paragraph 2 of this Article, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement.” Id. at art. 32(3).

[100] Id. at art. 32(5).

[101] See e.g. SADC Model BIT, supra note 2, at art. 29.18.

[102] Id. at art. 29.18(a).

[103] Id. at art. 29.18(f).

[104] Id. at art 29.19.

[105] In the case of restitution, the award shall provide that the Host State or Investor, as the case may be, may pay monetary damages and any applicable interest in lieu of restitution. See Id. at art. 29.19(a)(ii).

[106] Id. at art. 29.19(c).

[107] Id. at art. 29.19(b).

[108] The Protocol on Investment, supra note 10, at art. 3, p. 17.

[109] Id. at art. 28(1), p. 35.

[110] See South African Development Community, Protocol on the Tribunal and Rules thereof, Aug. 7, 2000, available at http://www.sadc.int/files/1413/5292/8369/Protocol_on_the_Tribunal_and_Rules_thereof2000.pdf.

[111] See infra Section 7.

[112] However, Article 8 imposes a transparency obligation on State Parties and obliges States to “promote and establish predictability, confidence, trust and integrity by adhering to and enforcing open and transparent policies, practices, regulations and procedures as they relate to investment.” The Protocol on Investment, supra note 10, at art. 8, p. 31.

[113] Id. at art. 14, p. 32.

[114] Id. at art. 7, p. 31. Much narrower than what is found in the SADC Model BIT.

[115] Limited to Article 3 which provides that State Parties “shall support the development of local and regional entrepreneurs and enhance regional productive capacity within the [r]egion . . . .” Id. at art. 3(1), p. 30.

[116] Limited Obligation on Investors. Article 10 (Corporate Responsibility) stipulates: “Foreign investors shall abide by the laws, regulations, administrative guidelines and policies of the Host State.” Id. at art. 10, p. 31.

[117]United States – Subsidies on Upland Cotton, WT/DS267/R, 8 September 2004. See alsoEuropean Communities – Export Subsidies on Sugar, WT/DS266/AB/R. WT/DS283/AB/R. 28 April 2005.

[118] Report by the Consultative Board to the WTO to the Director-General Supachai Panitchpakdi, The Future of the WTO: Addressing Institutional Challenges in the New Millenium (2004) 50, available at http://www.wto.org/english/thewto_e/10anniv_e/future_wto_e.pdf (last visited Jan. 6, 2014).

[119] See TN/DS/W/42; TN/DS/W/15, 25 September 2002; TN/CTD/W/3/Rev. 2, 17 Nov. 2002; JOB (03)/55,10 March 2003.

[120] S.A. BIT Policy Framework Review, supra note 7, at 14.

[121] Id. at 15.

[122] Id. at 22.

[123] Id. at 5.

[124] Id.

[125] Promotion and Protection Investment Bill, 2013, General Notice 1087 in GG36995 of 1 Nov. 2013 (S. Afr.) available at http://www.greengazette.co.za/documents/national-gazette-36995-of-01-november-2013-vol-581_20131101-GGN-36995.pdf.

[126] Id. at art. 3(a).

[127] Id. at art. 3(b).

[128] Id. at art. 2(a)-(d).

[129] Id. at art. 4(1).

[130] Id.

[131] Id. at § 10.

[132] Id. at art. 4(3).

[133] Id. at art. 5(1)(a).

[134] Id. at art. 5(1)(b).

[135] Id. at art. 5(3).

[136] Id. at art. 6.

[137] Id. at art. 7.

[138] Id. at art. 8.

[139] Id. at art. 9.

[140] Id. at art. 6(2).

[141] Id. at art. 6(4).

[142] Id. at art. 7(1).

[143] Id. at art. 7(1).

[144] Id. at art. 11(1).

[145] Id. at art. 11(5).

[146] Adopted at the Sixth Meeting of ACP Trade Ministers (Brussels 31 July-1 August 2003).

[147] Adopted at the African Union meeting of Ministers’ Meeting of Trade (Grand Baie, Mauritius, 19-20 June 2003).

[148] Adopted at the Second LDC Trade Ministers’ Meeting (Dhaka, Bangladesh, 31 May-2 June 2003).

[149] Adopted by the Ministers of Trade of the Member States of the African Union, at the Third Ordinary Session in Cairo, Egypt, on 8-9 June 2005.

[150] WTO Ministerial Conference, Doha Ministerial Declaration, WT/MIN(01)/DEC/1 (November 20, 2001), available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm (last visited Jan. 6, 2014.

[151] Id. at para. 22.

[152]The challenges of investment arbitration in Africa are many and include lack of judicial familiarity with international arbitrational and international investment law, lack of necessary infrastructure, lack of human resources, corruption, problems associated with enforcement of judgments, and lack of an established body of jurisprudence on relevant issues.

[153] The Protocol on Investment, supra note 10, at art. 28(2)(a), p. 35. An investor may also refer disputes to the ICSID or an international arbitrator or ad hoc tribunal “to be appointed by a special agreement or established under the Arbitration Rules of the United Nations Commission on International Trade Law.” Id. at art. 28(2)(b), p. 35.

[154](2007) AHRLR 141 (SADC 2007); Mike Campbell (Pvt) Ltd and Others v Republic of Zimbabwe (2/2007) [2008] SADCT 2 (November 28, 2008).

[155] Brigitte Weidlich, Zimbabwe pulls out of SADC tribunal, The Namibian, (September 4, 2009), http://www.namibian.com.na/indexx.php?archive_id=57322&page_type=archive_story_detail&page=2850.

[156]Made up of all SADC Heads of States or Government, the SADC Summit is responsible for the overall policy directionand control of functions of the community. Essentially, the Summit is the policy-making institution of SADC. See Summit of Heads of State and Government,South African Development Community, http://www.sadc.int/about-sadc/sadc-institutions/summit/ (last visited Jan. 6, 2014).

[157] South African Development Community, Communique of 30th Jubilee Summit of SADC Heads of State, August 17, 2010.

[158] South African Development Community, Communiqué – Extraordinary Summit of Heads of State And Government of the Southern African Development Community, Windhoek, Republic of Namibia, May 20, 2011.

[159] Id.

[160] Id.

[161] Id.

[162] Final Communiqué of the 32nd Summit of SADC Heads of State and Government. http://www.tralac.org/files/2012/08/Communique_32nd_Summit_of_Heads_of_States-Aug2012.pdf

[163] Government of the Republic of Zimbabwe v Fick and Others, (CCT 101/12) [2013] ZACC 22; 2013 (5) SA 325 (CC); 2013 (10) BCLR 1103 (CC) (June 27, 2013)( referring to Article 32 of the SADC Tribunal protocol, which obliges all member states to facilitate the enforcement of judgments and orders of the Tribunal, the Constitutional Court essentially came to the conclusion that it would recognize and help enforce the decision of the SADC Tribunal in Campbell.). See also Fick and Others v Government of the Republic of Zimbabwe, Case No 77880/2009, North Gauteng High Court, Pretoria, January 13, 2010, unreported; Fick and Others v Government of the Republic of Zimbabwe, Case No 77881/2009, North Gauteng High Court, Pretoria, February 25, 2010, unreported; Government of the Republic of Zimbabwe v Fick and Others [2011] ZAGPPHC 76; Government of the Republic of Zimbabwe v Fick and Others [2012] ZASCA 122 (Supreme Court of Appeal judgment).

[164] News 24, Zuma suggests alternative SADC tribunal, 6 November 2013. http://www.news24.com/SouthAfrica/Politics/Zuma-suggests-alternative-SADC-tribunal-20131106

[165] Government of the Republic of Zimbabwe v Fick and Others, (CCT 101/12) [2013] ZACC 22; 2013 (2) SA 325 (CC); 2013 (10) BCLR 1103 (CC) (June 27, 2013).

[166]In the European Union, the EU now has exclusive competence over FDI-related matters. See Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community, CIG 14/07, Dec. 3, 2007, available at: http://www.consilium.europa.eu/uedocs/cmsUpload/cg00014.en07.pdf.

[167] Knowledge@Wharton, University of Pennsylvania, Wharton School of Business, Does a Growing Africa Need a Foreign Investment Code? June 6, 2012, http://knowledge.wharton.upenn.edu/article.cfm?articleid=3010 (to Coleman such a code should cover issues such as local content, reciprocity, cultural and historic legacies, competition law, capital controls and liquidity, and regulatory oversight) (last visited Jan. 6, 2014).

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