In­vestors seek global re­course

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - RISHABAN MOOD­LEY

THE Draft Pro­mo­tion and Pro­tec­tion of In­vest­ment Bill, 2013 will have for­eign in­vestors think­ing twice be­fore look­ing at SA as a favourable in­vest­ment des­ti­na­tion as it de­prives them of the op­por­tu­nity to in­de­pen­dently re­fer a dis­pute to an in­ter­na­tional ar­bi­tra­tion fo­rum with­out the con­sent of the South African govern­ment.

For­eign in­vestors favour in­ter­na­tional fo­rums as they re­move dis­putes from the host na­tion’s po­lit­i­cal and le­gal sys­tems and be­lieve they of­fer the prospect of a neu­tral, and per­haps more favourable, hear­ing.

As the bill stands, for­eign in­vestors would only be able to di­rectly re­fer dis­putes to me­di­a­tion which would be fa­cil­i­tated by the De­part­ment of Trade and In­dus­try or ar­bi­tra­tions in ac­cor­dance with the Ar­bi­tra­tion Act, No 42 of 1965.

The cur­rent state of the law gov­ern­ing ar­bi­tra­tions in SA pro­vides even less com­fort to for­eign in­vestors. There is no dis­tinc­tion be­tween do­mes­tic and in­ter­na­tional ar­bi­tra­tion, and it is not based on the United Na­tions Com- mis­sion on In­ter­na­tional Trade Law (Unci­tral model law).

The Law Com­mis­sion made ex­ten­sive rec­om­men­da­tions for its re­form, but to date govern­ment has made no progress in re­vis­ing the ar­bi­tra­tion leg­is­la­tion.

Re­cently the De­part­ment of Trade and In­dus­try sub­mit­ted that a draft bill gov­ern­ing do­mes­tic and in­ter­na­tional ar­bi­tra­tion is to be pre­sented to the cabi­net (New Ar­bi­tra­tion Bill). The De­part­ment of Trade and In­dus­try’s direc­tor for In­ter­na­tional Trade and In­vest­ment, Mus­taqeem de Gama, told BDlive that: “The bill will re­place the cur­rent Ar­bi­tra­tion Act which dates back to 1960. It will aim to ex­pe­dite ar­bi­tra­tion pro­ceed­ings and en­sure lo­cal and for­eign in­vestors have mod­ern and ef­fi­cient al­ter­na­tive dis­pute res­o­lu­tion mech­a­nisms.”

Ac­cord­ingly, the Ar­bi­tra­tion Act will be up­dated and har­monised with in­ter­na­tional laws to pro­vide in­vestors with a firm dis­pute res­o­lu­tion mech­a­nism that is recog­nised in­ter­na­tion­ally.

We can hope that if the Ar­bi­tra­tion Bill is even­tu­ally assented to, and the in­ter­na­tion­ally recog­nised Unci­tral model law is in­cor­po­rated, it will in­crease the con­fi­dence of for­eign in­vestors.

THE labour law amend­ment process is rapidly draw­ing to a close. In the first of a wave of amend­ments, the amended Em­ploy­ment Eq­uity Act was gazetted on July 25 with an im­ple­men­ta­tion date of Au­gust 1. Yes, that’s cor­rect — just a week from gazetting to pub­lish­ing.

This is the first of a vol­ley of trans­for­ma­tion leg­is­la­tion aimed at fur­ther re­dress­ing the im­bal­ances of our past. Cou­pled with the Em­ploy­ment Eq­uity Act and its reg­u­la­tions, one has the broad­based black eco­nomic em­pow­er­ment codes (whose im­ple­men­ta­tion has been de­layed) as well as the Women Em­pow­er­ment and Gen­der Equal­ity Bill l (which has been with­drawn for fur­ther de­bate af­ter op­po­si­tion from “both sides” of the so­cial part­ners).

While some may say that we are on the right track with our trans­for­ma­tive path and may ques­tion whether there is in fact a need for fur­ther and amended leg­is­la­tion, the Em­ploy­ment Eq­uity Com­mis­sion re­port in­di­cates that there is a lack of trans­for­ma­tion in the top man­age­ment level of South African pri­vate com­pa­nies. Un­for­tu­nately, there is gen­er­ally lit­tle im­pe­tus shown to cre­ate suc­cess­ful suc­ces­sion plans to en­sure that we do not sit with the same de­mo­graphic prob­lem in the fu­ture.

The act it­self was gazetted on Jan­uary 16 this year and, sub­se­quent to that, de­bate has raged over the con­tent of the em­ploy­ment eq­uity reg­u­la­tions, which seemed to have flown in the face of the re­cent judg­ment in the De­part­ment of Cor­rec­tional Ser­vices case, which had clearly in­di­cated that a mix be­tween re­gional and na­tional de­mo­graph­ics would need to be ap­plied. The reg­u­la­tions had in­di­cated, par­tic­u­larly at the higher oc­cu­pa­tional lev­els, that the na­tional de­mo­graph­ics would need to be ap­plied.

This met with stiff op­po­si­tion, as cer­tain prov­inces have a sub­stan­tially dif­fer­ent de­mo­graphic pro­file to the na­tional one. Two prov­inces which are prime ex­am­ples of this are the Western Cape (with a 51% Coloured de­mo­graphic) and Lim­popo (with a 95.8% African de­mo­graphic). These sta­tis­tics are sub­stan­tially

The de­part­ment has thrown down the gaunt­let to busi­ness to en­sure rapid com­pli­ance

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