19 July 2018

East Africa: Meeting Discusses Investments in EAC

Dar es Salaam — Regional investment policies should be people-centered, representatives of civil society organisations (CSOs) have urged.

They should protect human rights and promote the environment of attaining sustainable development to have a win-win investment setting in the East African Community (EAC), they stressed.

They were speaking during their meeting here recently.

The meeting was run under the theme 'Understanding the Changing Global Investment Policy Landscape and its Implications on the EAC'.

It also discussed the importance of conducting productive research and assessing financing from global systems before embarking on projects. Mr Burghard Ilge, a senior policy officer from a Dutch environmental organisation, Both Ends, argue that "the current generation of IISs [international investment agreements] has also failed to address the uneven balance of rights and responsibilities between foreign investors and host governments".

He clarified that foreign investors enjoyed numerous legal rights without needing to worry about corresponding responsibilities.

"This fact is explained by the reality that 60 per cent of all investors to State Dispute Settlement claims are brought against developing countries and the situation has serious repercussions for poverty reduction, inclusive growth and sustainable development" he said Mr Ilge.

The executive director of the Southern and East Africa Trade Information and Negotiations Institute, Mr Nathan Irumba, spoke about unequal treaties which only consider rights and no obligations for investors and ignoring national legal system.

"Most treaties are unfair as they do not take into consideration local residents' rights," he argued.

Mr Arnold Kwesi from Uganda Consortium on Cooperate Accountability said most of bilateral investment treaties (BITs) and IIAs did not consider human rights in such a way that there were no social impact assessment, human rights impact assessment and environmental impact assessment and the fact that people's welfare was not a centre for them."How do you negotiate with the community that you don't have information about it or when the information is only on one side, especially investors? Will the treaty be sustainable if you will spend much money when you haven't involved communities?"

The executive director of Haki Madini Tanzania, Mr Amani Mhinda, said communities should be educated on how to benefit from projects.

Mr John Bosco Kanyangoga, a consultant from Rwanda, said Africans need foreign direct investment inflows, but that should be achieved in a healthy and sustainable way.

"Issues like technology transfer and tax mechanisms must be implemented in win-win situations for both parties," he said.

Mr Jared Maranga, of Tax Justice Network Africa in Burundi, stressed that community consultations were a must.

"Respective governments must come up with strategies which will be beneficial to both sides -- investors and locals. Government agencies must connect people with investors. Policies and legislation should be amended to protect investors and people where projects are undertaken. Issues of land are extremely critical in many areas. Land is not just a commodity that an investor can buy as it has a different meaning in African societies like cultural and social heritage."

Mr Ilge said the first obvious option was to simply let parties determine for themselves during treaty negotiations, which of the many fundamental human rights, labour rights, environmental rights and anti-corruption obligations they want to include in the BIT.

"Every single obligation to be imposed upon corporations would have to be the object of negotiation between the parties. This is not the most well suited approach as such negotiations would likely take a considerable amount of time and raise numerous controversial issues" he said.

Also, negotiation inevitably involves compromises, which may not result in an effective reinforcement of human rights obligations. For all these reasons, countries will likely be reluctant to embark on such an uncertain journey.

The treaty's section on investor state dispute resolution must also contain a provision indicating specifically how human rights obligations imposed upon corporations can actually be enforced before an arbitral tribunal.

The provision must make it clear that an arbitral tribunal has jurisdiction over allegations of human rights violations committed by corporations.

Setting up a regime of direct obligations under a BIT without any enforcement mechanism will not only render these rights totally ineffective, it would in fact, as one author puts it, "not enhance human rights, but trivialise international law".

An option on a case of human rights violations, respondent state should be allowed to raise any such allegations during the arbitral proceedings. This is the offsetting of damages or mitigation option. A tribunal would thus take into account such allegations when making its determination on the merits of the dispute.

Under 'counterclaim' option, a claimant investor would be permitted to file a claim, even in the face of human rights violations, but the host country would be allowed to raise human rights allegations in a counterclaim.

Mr Irumba stressed on a need of international debate on how to reshape the international policy framework and rules for investment in order to ensure that these indeed support the globally agreed ambition of inclusive and sustainable development for all by 2030.

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