Malcolm Langford, Jason Brickhill and Mary Munyembate
11 November 2009
opinion
Johannesburg — ON ASSUMING responsibility for the Department of Trade and Industry, Minister Rob Davies ordered an immediate review of SA's bilateral investment treaties, and his department is now confidentially fashioning a proposal for Cabinet approval.
The decision was not surprising. The government is facing a à 266m challenge by European investors. They claim SA's new law regulating the mineral and petroleum industries violates investment SA's treaties with Belgium, Luxembourg and Italy. The case is being heard by international arbitrators -- not South African courts -- and the terms of the treaties, signed in the 1990s, do not explicitly take account of SA's unique history, present developmental needs or human rights.
The department recently issued a review of its policy for public discussion and its conclusion can be summed up in two words: mea culpa. In a frank admission, the department concluded that the government had negotiated numerous investment treaties with no internal co-ordination and without an overarching policy framework to govern foreign investment. By June 2006, 41 agreements had been signed.
More surprising, the review admits the government may have unwittingly contravened the constitution by ratifying investment treaties without parliamentary approval.
The department's policy review document refreshingly sets out a wide range of options for going forward, which includes discontinuing the use of these treaties. While some argue that they are crucial for attracting foreign investment, evidence to support this assertion is hard to find. Countries such as Brazil have attracted staggering levels of foreign investment with not an investment treaty in sight.
The pressure to maintain investment treaties is nonetheless strong. Mining companies at a seminar last year said they placed particular store in them, due to the making of large upfront capital investments and need for security of tenure in mining rights. SA's embassies in countries with strong flows of investment to and from SA, such as Middle East countries, are also said to be enthusiastic.
Even if investment treaties are maintained, they can be greatly improved. Two changes are critical. The first is to make sure the terms are drawn more tightly so they are consistent with SA's constitutional and international commitments on the environment, human rights and development. This should constrain many international arbitrators, who tend to march in the opposite direction by developing legal doctrines that severely limit the space for government policies that might affect foreign investors.
The second key change is to make investors exhaust their claims in South African courts before instituting international proceedings. Such a model is set out in a draft Norwegian agreement, while Australia has gone further and removed entirely the possibility of international arbitration for US companies on the basis that Australian courts are fit for the job.
If some sort of international appeal recourse is necessary, is arbitration the answer? Some investors in Europe have used the regional human rights court instead. Could foreign investors in SA thus be directed towards the Southern African Development Community tribunal? In its first decision, it held expropriation of a white farmer's property in Zimbabwe was unlawful.
But the department has still not put all of its cards on the table. Its terms of reference state that it would locate and compile a detailed index of all investment treaties concluded, ratified or under consideration. If this has been done, it has not yet been released to the public. The government expressed willingness to release documentation in connection with the European mining arbitration claim, as part of an amicus intervention by civil society organisations. But it did not volunteer to release all of its documents, nor did the tribunal order it to do so.
It is time these treaties and other relevant documents were made public. The public has a right to know what investment treaties SA has concluded -- and the implications for the country and its people.
Langford is from the Norwegian Centre for Human Rights; Brickhill is from the Legal Resources Centre; and Munyembate is from the Centre for Applied Legal Studies.
Be the first to Write a Comment!
Copyright © 2009 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
