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.  Continue reading

Mediation use in ISDS by Fatma Khalifa*

Investor State Dispute Settlement (ISDS) has been largely dominated by arbitration as a means of dispute settlement. The problems encountered by parties in ISDS cases and the concerns voiced by multiple stake holders call for attempting new mechanisms, such as mediation, for settling Investor State Disputes (ISD). Mediation in ISDS is rather a new combination of terms. In this paper I will first identify mediation (1), compare it to other dispute settlement mechanisms (2), identify the players in the mediation process and the consent of the Parties (3), briefly explain the mediation process (4), and finally conclude by shedding some remarks on the current status and proposals for a way forward. Continue reading

South Africa’s Promotion and Protection of Investment Bill: A Brief Outline, by Muhammad Mustaqeem De Gama*

Introduction

The Cabinet decision of 20 July 2010 specified that an inter-ministerial work group should commence work on an investment protection act for South Africa. Such an act would incorporate, codify and interpret core international law concepts and clarify the level of protection that investors may expect in South Africa. On 1 November 2013 the draft Bill on the Promotion and Protection of Investment [NOTICE 1087 OF 2013 in Government Gazette (GG) No. 36995] (hereinafter “the Bill”) was published for public comment. The notice provided for a three month public comment period. This period came to an end on 31 January 2014. The Department of Trade and Industry is currently assessing the public comments and will introduce the Bill to Parliament as soon as the required technical and constitutional processes have been completed. Continue reading

Africa-China Bilateral Investment Treaties: A Critique by Dr. Uche Ewelukwa Ofodile*

This Article was first published in the Michigan Journal of International Law, Vol. 35(1), 2013.  If you wish to make references to the article please follow the pagination in the Michigan Journal of International Law. 

Synopsis

The purpose of this Article is to draw attention to, raise questions about, and generate discussions regarding the emerging norms, legal context, and long-term development-implications of South-South foreign direct investment (“FDI”) and South-South bilateral investment treaties (“BIT”). This Article seeks to refocus the discourse about FDI and BITs on developing countries in their role as exporters of capital and in the context of the much-touted new geography of investment. Can South-South BITs play a positive role in promoting development in sub-Saharan Africa any more than the Africa-North BITs? Is China concluding development-focused BITs with countries in Africa? The Article identifies the BITs between China and countries in Africa, analyzes the main provisions and the development-dimension of these BITs, and examines the extent to which they differ from model BITs used by Western countries. Continue reading

South Africa’s approach to the implementation of its Investment Policy Framework by Mustaqeem De Gama & Rafia De Gama*

  1. Background

In July 2010[1], the South African Cabinet adopted a new investment policy framework which was aimed at modernising and strengthening the country’s investment regime.[2] Five core measures were mandated by Cabinet for the implementation of the new policy framework: (i) development of foreign investment legislation;[3] (ii) review and termination of existing old generation BITs; (iii) development of a new model BIT; (iv) BITs will only be entered into on the basis of compelling economic and political reasons; and (v) the establishment of an Inter-Ministerial Committee (IMC) to oversee the implementation of these measures. Continue reading

South Africa’s Foreign Investment Regulation: A revisit, by Azwimpheleli Langalanga*

History of South Africa’s BIT regime

South Africa emerged from international isolation in 1994 after ushering in a majority governance system. It was the last country in the African continent to gain freedom. Most countries which had gained independence during the decolonisation period had engaged in economic nationalism. In Southern Africa, Zambia was one of them. South Africa as the last African country to attain political freedom had to signal to the world and foreign investors in particular that it was a safe investment destination.[1] Continue reading

ICSID Tribunal Declines Jurisdiction when Confronted with Corruption, by Antonio Delgado

On 4 October 2013, ICSID dispatched the arbitral tribunal’s award in Metal-Tech Ltd v the Republic of Uzbekistan.[1] The tribunal declined jurisdiction after finding that corruption had been established “to an extent sufficient to violate Uzbekistan law in connection with the establishment of the Claimant’s investment in Uzbekistan.”[2] Continue reading

The OHADA Celebrates its 20th Anniversary, by Antonio Delgado

On 17 October 2013, the Organisation pour l’Harmonisation en Afrique du Droit des Affaires (Organisation for the Harmonization of Business Law in Africa) or OHADA celebrated its 20th anniversary under the presidency of Burkina Faso. A series of events have been organised to commemorate the event, including a meeting of business law experts in Ouagadougou to discuss the achievements and the future prospects of the organisation.[1] Continue reading

Awaiting the Trans-Pacific Partnership, by Antonio Delgado

Last month, the leaders of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam announced that the negotiations for completion of the Trans-Pacific Partnership (“TPP”) were on track. Progress was made on the legal texts and annexes that will regulate a diverse range of sectors that include goods and services, investment, financial services, government procurement, and temporary entry markets. The focus of the TPP is now aimed at resolving the outstanding issues and achieving a final agreement by the end of this year.[1] Continue reading

Pakistan’s BIT Dilemma: Understanding Why a ‘Model’ BIT may not be the Best Approach, by Nida Mahmood

Pakistan is on its way to develop its own ‘Model’ Bilateral Investment Treaty (BITs) as the standard international investment treaty to seek and attract more foreign investment.[1] Such ‘Model’ investment treaties usually contain blanket and comprehensive provisions to cater to the diverse relationships that a State may have with other potential capital exporting States and in this way, a standard-form contract-like treaty is perpetuated to achieve a harmony in terms of obligations that a State is prepared to undertake as regards investments to and from its territory.  Continue reading

South Africa denounces BIT with Spain, by José Ángel Rueda

On 23 June 2013 South Africa sent a notification to Spain in order to denounce their BIT.[1]

The BIT was signed ad referendum in Pretoria on 30 September 1998 and entered into force on 23 December 1999.[2] According to Article XII(1) the BIT was in force for an initial period of 10 years (until 23 December 2009) and from then onwards it was in force for consecutive 2-year periods (the first one, from 24 December 2009 until 23 December 2011; the second one, from 24 December 2011 until 23 December 2013; and so on).

Article XII(2) allows any State party to denounce the BIT by a notification in writing six months before the date of expiry of the BIT. As the second 2-year period referred to above lasts until 23 December 2013, South Africa had until 23 June 2013 to send its notification. It did so on time.

In any event, as usual in BIT practice, Article XII(3) contains a survival clause whereby the BIT will be in force for an additional 10-year period from 23 December 2013 for all investments made or acquired before that date.

We understand this move by South Africa is related to a hot debate about BITs within that country.[3] We will be happy to receive comments from South Africa on this topic.[4]


[1] See http://www.comercio.es/acuerdos, footnote 7 (in Spanish).

[2] See BOE (Spanish official gazette) no. 26, 31 January 2000.

[3] See “Bilateral Investment Treaty Policy Framework Review”, Executive Summary of Government Position Paper, Pretoria, June 2009, Government Gazette, 7 July 2009.

[4] See a previous post by Azwimphelele Langalanga, “South African Courts and the Expropriation Conundrum: Caveat Foreign Investor”, 31 May 2013, at http://blogaila.com/2013/05/31/south-african-courts-and-the-expropriation-conundrum-caveat-foreign-investor-by-azwimphelele-langalanga/

Joint statement between the EU and Bangladesh after the deadly Savar factory collapse, by José Ángel Rueda

On 28 May 2013 EU’s Trade Commissioner Karel de Gucht and Bangladeshi Foreign Minister Dr. Dipu Moni issued a joint statement[1] regarding the deadly collapse of a garment factory in Savar, near Dhaka, on 24 April 2013 where 1,129 people were killed and some 2,500 were injured.[2] The message is crystal clear for both exporters and importers of garment products manufactured in Bangladesh in particular and in developing countries in general:

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South African Courts and the Expropriation Conundrum: Caveat Foreign Investor, by Azwimphelele Langalanga

Summary

A milestone decision was passed down by South Africa’s premier court seated in Braamfontein, Johannesburg. This was in the case of Agri South Africa v. Minister for Minerals and Energy.[1] It is a case testing the legality of the Mineral and Petroleum Resources Development Act (MPRDA) 28 of 2002 (as amended), particularly its black empowerment provisions. Simply put this piece of legislation had the effect of vesting all mineral ownership to the state. Before it came into being, mineral resources underground were owned by the land owners who in most instances happened to be farmers.[2] These farmers had inter alia the right to exploit the minerals and to lease such mining rights to anyone on their terms. The claimants challenged it on the basis that it expropriated their property. The court ruled that there is a difference between expropriation and deprivation. And basically provided that the concept of indirect expropriation did not apply in South African law.

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