Although the problem of corruption is widespread, in Sub-Saharan Africa, corruption is endemic. There is surmounting evidence that corruption is rapidly impairing political, economic and social development in the Sub-Saharan region of Africa. The effects of corruption on economic growth and economic efficiency have discouraged foreign investment in that part of the African continent. Given the prevalence of corruption, the establishment of a Multilateral Investment Court (MIC) would be noble and timeous in Sub-Saharan Africa. The MIC would offer a platform for a strong dispute-resolution mechanism in dealing with corruption, and this would be mutually beneficial to foreign investors and Sub-Saharan African states. Foreign investors need to hedge their investments and the African states need foreign investment for their economies to grow. An assurance of an independent and efficient corruption-related dispute settlement mechanism would boost investor confidence, thereby attracting investment and development in the region.
The process of the establishment of the Multilateral Investment Court (MIC), to replace or operate in parallel to the current Investor State Dispute Settlement System (ISDS) system, is ongoing under the auspices of the United Nations Commission Trade Law (UNTRAL) Working Group III (Working Group III). In this forum, parties are invited to make submissions with a view to building support for on the establishment of the court. As expected, the submissions reveal varying concerns, perceptions and interests of states.
The aim of this post is to illustrate how the MIC can be used as a tool for harmonising international investment law (IIL) with general international law and other branches of international law. The increase in investor state arbitrations has led to a growing increase in the overlap between investment obligations and environmental, human rights and other international obligations. This may cause conflicts between the different branches of international law where more than one branch of international law is implicated in the investment dispute. This has led to the fragmentation of international law with calls to rebalance the system to allow for the consideration of broader public international law in the settlement of investor-state disputes.
Most in the International Investment Law community would be aware of the ongoing work by the United Nations Commission on Transnational Trade Law’s (UNCITRAL’s) Working Group III on reforming the Investor-State Dispute Settlement (ISDS) system. This work has been actuated by criticisms of the ISDS system (or, more precisely, the Investor-State Arbitration (ISA) system). A major proposed reform is the establishment of a standing Multilateral Investment Court (MIC) to replace or co-exist with the ISA system.
The Investor-State Dispute Settlement (ISDS) system in its current form has been viewed as being malignant to the Global South. Africa in particular, has been a strong critic of the system with the most radical action against ISDS coming from South Africa, which has stated that investment arbitration awards are “directly opposed to the legitimate, constitutional and democratic policies of the country”. The United Nations Commission on Trade Law (UNCITRAL) has now mandated its Working Group III (WG3) to lead ISDS reform efforts. One of the key areas of reform under the purview of WG3 is the inconsistency, incoherency, unpredictability and incorrectness of investment arbitration awards.
This contribution has looked at the extent to which the MIC can improve the participation of African local communities in ISDS and ensure a better protection of their rights and interests. It started by discussing the current participation of these communities in ISDS with a view of identifying the challenges these communities are facing before analyzing how the MIC can address some of these challenges. Emphasis should be placed on the selection of MIC members and encourage the appointment of members with broad expertise in (public)international law and public issues and not experts with only commercial background. Indeed, most recent investment agreements contain provisions that protect local communities. The challenge therefore lies in how these agreements are interpreted and applied. In addition, the MIC investment advisory centre should extend its services to local communities and assist them in the drafting and submission of their briefs to investment tribunals.