An Overview of South Africa’s Bilateral Investment Treaties and Investment Policy

This article gives an overview of the bilateral investment treaties (BITs) currently in existence in South Africa and shows how the exposure to international investment arbitration has led South Africa to reassess its (lack of) policy on investment treaties and to develop a new approach to the protection of foreign investment. An analysis of the provisions of the South African BITs is done and it shows that there was no change or progression in the government's approach to the negotiation and signing of the BITs through the years; the provisions contained in these agreements are all more or less the same and have stayed the same through the years. South African BITs are found to be fairly standard when it comes to their content, other than what one could have expected of a State that was in a process of transformation when these treaties were signed and thus in a perfect situation to take its own domestic needs and policies into account. Because this was not done, there was a sudden awareness of the fact that the BITs perhaps could entail more harm than good when South Africa became involved in investment arbitrations as a result of some of its internal policies and domestic legislation leading to complaints of treaty violations. As a result of this, a review of the government's investment policy framework was undertaken and a number of its BITs were terminated; the idea is to replace them with a new domestic framework for the protection of foreign investment, doing away with investor—state arbitration as can be seen from the Promotion and Protection of Investment Bill that was recently introduced into Parliament. Disputes between investors and the South African government that arise as a result of an averred treaty breach may still be taken to arbitration in terms of the terminated BITs until the sunset period runs out. But new investors who cannot rely on the protection of a BIT do not have this option and until such time as legislation is passed and certainty is achieved on the issues of expropriation, compensation and the interaction with broad-based black economic empowerment and the forms that this may take as well as the resolution of disputes, the position of new investors and their investments is going to continue to remain uncertain.