International investment disputes rise — Unctad
DISPUTE settlements between investors and states saw 62 new cases initiated last year, the highest number of known treaty-based disputes filed in a year, according to a report by the United Nations Conference on Trade and Development (Unctad) last month.
This peak confirms that foreign investors continue to rely on bilateral and regional international investment agreement negotiations. However, SA has been reviewing its bilateral investment treaties mainly because of challenges posed by them and the rise in legal challenges following the global financial crisis.
Peter Draper, senior research fellow at the South African Institute of International Affairs, said on Friday the report vindicated SA’s decision to review and renegotiate some of its first-generation treaties.
Xavier Carim, deputy director general of international trade and economic development at the Department of Trade and Industry, said in February that SA had concluded at least 15 bilateral trade treaties, mainly with European countries, during the post-apartheid era. He described it as a “good faith attempt” to assure investors their investments would be safe under the new democratic government.
Mr Carim said investor state dispute settlement or arbitration was “contentious”, and the system was fragmented, with no common standards. Dispute settlement mechanisms form part of most treaties, and provide rights to foreign investors to claim damages from alleged breaches by host governments of their obligations relating to the investments in the host country.
Mr Draper said there were concerns that the panels that decided the cases were stacked in favour of corporate interests and “investors also need protection”.
Last year 70% of the cases resulted in victories for investors.
Investors have challenged a broad range of government measures, including those related to revocations of licences, breaches of investment contracts, irregularities in public tenders, changes to domestic regulatory frameworks, withdrawal of previously granted subsidies, direct expropriations of investments and tax measures.