Investment Protection Agreements: The Implications of South African Policy and Legislative Changes
International agreements on the promotion and protection of foreign investment do not guarantee investments; nor the right kind. They do, however, play an important role as part of the considerations which govern decisions by foreign investors. Uncertainty about the rights of investors may result in investment decisions in favour of alternative destinations; or efforts to carve out special dispensations. The latter usually comes at a price; such as a lack of transparency.
The recent decision by the South African government to withdraw from certain Bilateral Investment Treaties (BITs) and to propose, in the place thereof, national legislation in the form of the Promotion and Protection of Investment Bill, has triggered a wide-ranging debate and some strong criticism. The government does not dispute the need for legal certainty for investors; but has opted for a new approach as to how and where protection will be available. This has become necessary in order to regain the policy space which it maintains is necessary in order to regulate investments in the public interest.
This paper discusses the investment protection debate and related developments within a broader international trade, development and regional context. The additional aim is to clarify some of the technical aspects of the proposed legislation.
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