Presentation Transcript

1. Investment Arbitration in Africa

   Mahnaz Malik 20 Essex St
2. Overview Growing opportunities for foreign investors in Africa Improvements in governance and rule of law often do not keep to the pace of economic opportunity The risks facing foreign investors in Africa: From Cape Town to Cairo… The international law protections enforceable through arbitration What protections are available? Who can benefit from these protections? How to benefit from these protections? Scenarios
3. The Risks Facing Foreign Investors Political risk Physical violence Discrimination Expropriation Corruption Termination of contracts Denial of justice in local courts Other concerns?
4. The International Law Protections 179 countries have signed over 2,800 bilateral and multilateral investment treaties offering a range of guarantees to foreign investors against government intervention or regulatory measures, including: Protection against expropriation without compensation Protection against unfair treatment Guarantee of full protection and security Guarantee of ‘national treatment’ and ‘MFN’ protection Right to resolve disputes via international arbitration
5. Investment treaties and arbitration in Africa African countries are party to approx. 27% of the world’s BITs Regional investment protection (COMESA Investment Agreement, SADC FIP, ECOWAS Energy Protocol) South Sudan is the forty-fourth, of a total of fifty-four, African states to have signed and ratified the ICSID Convention. Four states signed the Convention but have not ratified it to date. These are: Ethiopia, Guinea-Bissau, Namibia and Sao Tome and Principe. The remaining six African states neither have signed nor ratified the Convention. These are: Angola, Djibouti, Eritrea, Equatorial Guinea, Libya and South Africa. Of the forty-four African Contracting States, 27 countries (61%) have been involved in ICSID proceedings to date. The rankings of African Contracting States that have been involved in investment disputes under the ICSID Convention is topped by Egypt, with sixteen proceedings to date. The Democratic Republic of Congo (DRC) is second in the rankings with nine proceedings. There have also been three proceedings against non-Contracting States under the ICSID Additional Facility Rules: one arbitration against South Africa and one arbitration and one conciliation proceeding against Equatorial Guinea. The following industries have been involved in Africa’s ICSID proceedings: industrial activities (15%), mining (14%), agriculture and forestry (12%), oil and gas contracts (11%), contracts to construct and/or upgrade and operate (11%), hospitality (10%), construction contracts (8%), power generation contracts (7%) and general commercial activities (7%).
6. How to benefit from these protections? Investment Planning: Structure or restructure the foreign investment via an investment vehicle incorporated in an appropriate jurisdiction to gain the protections offered under investment treaties International Arbitration: Enforce these international law protections directly before an independent and impartial international arbitration tribunal (often ICSID) without the need to refer the dispute first to the local courts
7. Examples Contract frustration in Algeria Political violence in Egypt Regime change in Libya Licence cancellation in Zambia Non-payment in Nigeria Delays in Ethiopian courts Regulatory controls on banks in Zimbabwe Environmental regulation in South Africa How can BITs/Investment treaties assist in protecting against risks?Investors can bring claims against the government for breach of the guarantees; use potential arbitration as a negotiation tool and request reduction/replacement of political risk insurance premiums
8. ALGERIA Algeria has 46 BITS, of which 24 are in force 2 known ICSID cases (LESI v Algeria and Consorzio v Algeria) BITs can help if contract with government or government owned entity or local courts provide unfavourable judgment in relation to contract dispute with partner Typical guarantees in BITs Umbrella clause: e.g. Denmark – Algeria BIT: “ Each Contracting Party shall observe any obligation it may have entered into with regard to investments of investors of the other Contracting Party.” Compensation in the event of nationalisation, expropriation or any measure tantamount to expropriation Guarantee of full protection and security Fair and Equitable Treatment Right of investors to bring arbitration claims against Algeria to claim damages forlosses Contract frustration in Algeria
9. Zambia Zambia has 12 BITS, of which 2 are in force Cancellation of licence by government entity (federal, provincial or local covered) Typical guarantees in BITs Compensation against expropriation Full protection and security: Duty to protect extends to non-physical elements such as legal protection Fair and Equitable Treatment Umbrella clause (duty to uphold all commitments with investors) Right of investors to bring arbitration claims against Zambia to claim compensation for losses arising from government’s breach of promise Licence cancellation or refusal of licence in Zambia
10. NIGERIA Nigeria has 22 BITS, of which 13 are in force If non-payment by a government entity or court decision that does not enforce the payment obligation of a private party Typical guarantees in BITs Compensation against expropriation if it destroys value of investment entirely or significantly Fair and Equitable Treatment Umbrella clause (duty to uphold all commitments with investors) Right of investors to bring arbitration claims against Nigeria to claim compensation for losses arising from government’s breach of promise Non-payment in Nigeria

11. The future of investment arbitration in Africa?

    Mahnaz Malik 20 Essex St