Bilateral Investment Treaties

The present state of international economic law leaves much to be desired. Anchored by the multilateral General Agreement on Tariffs and Trade, which led to the creation of the World Trade Organization, and complemented by a vast network of bilateral and multilateral investment treaties and free trade agreements, international economic law is drawn from diffuse sources. Additionally, the WTO Dispute Settlement Body and Appellate Body, which interpret the GATT provisions, and arbitral tribunals, which interpret investment protection agreement provisions, shape the content of international economic law. However, the patchwork of treaty text and dispute settlement rulings into a body of law is unraveling.

Although developing countries are very eager to attract FDI through BITs, for most parts, they deliberately water down the environmental concerns. However, recently we have witnessed the incorporation of environmental standards and provisions in BITs. This ambitious effort however is usually frustrated by decisions of international arbitration tribunals.

Based the observation from Ghana and Kenya, there is the need to improve the efficiency and effectiveness of investment tax incentives to ensure transparency, accountability, reduce associated costs, and check abuse.

Local communities, for their part, consider investor responsibility a necessary part of the fabric of international law and politics. While the AU works towards framing business and human rights in Africa along with global developments regarding a treaty on business and human rights and treaties such as the Morocco/Nigeria BIT, African peoples and communities continue to adopt available mechanisms as avenues for communicating their positions on these important issues and exercising agency on a subject that is of utmost importance to their wellbeing.

The huge investments in the extractive sector should, in principle, be a catalyst for economic growth, job opportunities, and development. Often, these investments have been a source of environmental degradation, socio-economic malaise and despair. Equatorial Guinea, for instance, is a classic example of the ‘resource curse mystery in Africa. To leverage extractive resources for development, African countries are faced with legal, fiscal, implementation, infrastructure, regulatory and institutional challenges. This contribution addresses state and investor responsibility in the sustainable development of Africa’s extractive sector. It highlights four responsibility indices that will guide states and investors in fostering a shared value approach to an inclusive and sustainable development of Africa’s extractive sector.

While international trade has undergone significant structural changes recently, particularly with the proliferation of new generation of free trade agreements (FTAs), the debate on the consequences of IIAs for sustainable development continues to widen and intensify. In effect, while there has been fundamental changes in the international investment landscape in terms of players (now comprising state-owned enterprises and sovereign wealth funds) and FDI direction (with emerging economies now being, not only recipients, but increasingly home states), governments are also now adopting industrial policies and development strategies that contrast with their erstwhile hands-off approach to economic development.

Attracting foreign investment while holding transnational corporations to account for any human rights transgressions is by no means an easy feat. It will require that a careful balance be struck between the interests of the host State and its people, and that of private actors expecting good risk-return ratios in pursuit of the bottom line. Although international mechanisms such as the United Nations Committee on Economic, Social and Cultural Rights have long endorsed accountability for transnational corporations, a zero draft international convention to regulate this issue has only recently been developed.

With over 100 countries involved, the revision of the ACP-EU Partnership Agreement, signed in Cotonou on 23 June 2000 is an extremely important endeavor that presents immense opportunities to all the parties and that requires careful negotiations. The Agreement will expire in 2020 and the parties are currently negotiating a new framework that is expected to reflect today’s socio-economic opportunities, challenges and concerns. This contribution looks at some of the strategic elements to consider when updating or amending investment-related provisions of the ACP-EU Partnership Agreement.

The draft Pan-African Investment Code (PAIC) or (Code) was released in 2015 with the objective of fostering cross-border investment flows in Africa. While the draft code currently serves as “guiding instrument”, it remains a valuable blueprint for solving the long-standing investment problems plaguing the region. It is therefore imperative that African countries hasten their efforts to ensure its implementation as a binding treaty document. The decision to develop the Code was welcomed by experts as an opportunity to create a binding legal framework to oversee Africa’s industrial and structural transformation. The Code was also expected to balance the lopsided nature of the relationship between investors’ rights and host states’ obligations.

The AU’s focus should be to design the AfCFTA investment protocol as an instrument that will treat all investors equally, and that will also foster harmonisation at continental level from the top down. My argument is still valid although my solution will not resolve questions such as divergent policies and views with regard to whether investor state disputes should be referred to arbitration or litigation. Central to this issue is that African states have different levels of the rule of law. This means that under circumstances where the rule of law is poor, obliging investors to refer disputes to the courts of a host state riks denial of justice.