The international legal instrument to be adopted as the AfCFTA Protocol on Investment will constitute a binding international agreement for the AU Member States that have ratified this instrument and for whom it has entered into force.^[1] They are the State Parties to the AfCFTA.^[2] Only they will have rights and duties under the AfCFTA Agreement and its Protocols.

Under an investment agreement based on cooperation, individual State Parties will adopt national laws (or adjust existing investment related legislation) to give effect to obligations accepted under the AfCFTA Investment Protocol. This will apply to the protection of the rights of investors too. There will probably be general guidelines on domestic compliance, but individual State Parties will have the final say when it comes to the promotion, facilitation, and regulation of investments and investors.

The AfCFTA Investment Protocol will not be a stand-alone agreement. The AfCFTA Agreement defines an AfCFTA Protocol to mean “an instrument attached to this Agreement, which forms an integral part of the [AfCFTA] Agreement”.^[3] The Protocols on Trade in Goods, Trade in Services, Rules and Procedures on the Settlement of Disputes, Investment, Intellectual Property Rights, Competition Policy, and their associated Annexes and Appendices, shall form part of a single undertaking, subject to entry into force.^[4] It means the State Parties will be bound by all these AfCFTA instruments; they cannot pick and choose their obligations.

The Protocols on Investment, Intellectual Property Rights and Competition Policy are to be negotiated during Phase II. Phase III will include a Protocol on E-Commerce. Article 23 of the AfCFTA Agreement foresees other legal instruments “within the scope of this Agreement deemed necessary”. These additional legal instruments “shall be concluded in furtherance of the objectives of the AfCFTA and shall, upon adoption, form an integral part of this Agreement”.^[5]

This Protocol will probably provide for the establishment of specific committees for promoting the aims of this Protocol, but they will in all likelihood be of the same design as those mentioned in the Protocols on Trade in Goods and Services. These are platforms for inter-state participation and consist of representatives of the State Parties. We will not see institutions with supra-national powers; that would be incompatible with a cooperation agreement. The AfCFTA Secretariat may be given powers to oversee the implementation of the Investment Protocol, together with the general responsibilities of the Council of Ministers and the Committee of Senior Trade Officials.^[6]

National laws will probably apply to the activities of investors. Domestic courts will have jurisdiction over disputes involving private investors with a commercial presence within the States in question, including investors from third parties. This will have an important investment facilitation and governance implication. Private firms are the main actors when it comes to trade in goods and services and when FDI is at stake. Their rights and legitimate expectations should be protected. This must happen via appropriate investment facilitation mechanisms. Investors should enjoy due process rights and there should be enforceable rights to transparency and non-discriminatory treatment. Effective legal remedies through dispute settlement procedures exercised by independent judicial forums will be required.

The jurisdiction of the AfCFTA Panels and Appellate Body is limited to inter-state disputes. Article 1 of this Protocol defines a “dispute” as “a disagreement between State Parties regarding the interpretation and/or application of the Agreement in relation to their rights and obligations”. Under this formulation private investors will not have standing to sue host states.

How will the rights of private investors be taken care of? This will be one of the important matters to be negotiated and agreed. The right balance should be found between being sufficiently investor friendly and simultaneously protecting the policy space of host countries. The AfCFTA Investment Protocol should contain provisions about the rights and remedies to be enjoyed by private investors, including how disputes about actions by host governments will be settled. Indications are that national courts will decide disputes of this kind. This is the approach now favoured in the regional economic communities (RECs) and in several African States. National legal systems should, therefore, provide for the necessary remedies and guarantees.

In Africa (and elsewhere) there has been a move away from Bilateral Investment Treaties (BITs) insofar as they provide for investor-state dispute settlement. Some African States have given notice of terminating the BITs to which they are parties.^[7] But it should be noted that investor-state dispute settlement is increasingly governed by special dispute settlement arrangements.^[8] The United Nations has agreed to initiate work on a possible multilateral reform of investment dispute settlement. This includes the possible establishment of a multilateral investment court. In July 2017, the United Nations Commission on International Trade Law (UNCITRAL) agreed that further work should be carried out on the issue of a multilateral reform of investment dispute settlement. This follows a formal request from many countries, including the European Union and its Member States, to examine this issue.^[9]

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^[1] Art 23 AfCFTA Agreement.

^[2] Art 1 AfCFTA Agreement defines a State Party as “State Party” as an AU Member State “that has ratified or acceded to this Agreement and for which the Agreement is in force.”

^[3] Art 1 AfCFTA Agreement.

^[4] Art 8(2) AfCFTA Agreement.

^[5] Art 8(3) AfCFTA Agreement.

^[6] See Arts 11 and 12, AfCFTA Agreement.

^[7] South Africa is an example.

^[8] The European Union is, e.g., working on the establishment of a special international dispute settlement body to undertake this function.

^[9]United Nations Commission on International Trade Law (UNCITRAL) factsheet (europa.eu)