Wendy Shingai Madende

INTRODUCTION In recent decades, African states have been transforming international investment law (IIL) through treaty reforms and the enactment of domestic law. These reforms provide a genuine gesture of what this article calls as the Africanacity of IIL. The reforms shift the IIL paradigm by establishing adequate policy space to the host state, reiterating state sovereignty and, significantly, introducing obligations imposed on the foreign investors. Alongside these reforms, Africans are persistently negating the speculative imbalanced international investor-state dispute settlement (ISDS) system by suggesting local alternatives. These reforms can be traced to the Pan African Investment Code of 2016, which shapes the African IIL agenda. Thus, this article discusses Africa’s recent surge of reforms on IIL which transform the traditional regime. These commendable reforms give African states an opportunity to “regulate” IIL and guard their own interests. Yet the reforms are already showing some signs of incoherence, particularly on the binding nature of investment treaty models and on ISDS mechanisms, which may potentially negate the thrust of what this write up calls the “Africanacity” of IIL. The reforms redirect the historical path that most African countries have had to follow as constrained by the unexpected outcomes of receiving foreign investment. The current developments in investment law and policy in Africa are driven by Africa and permeate through bilateral, regional and global international instruments. Ordinarily, the IIL regime is subject to customary international law, bilateral, regional, and multilateral investment treaties, and free trade agreements (FTAs) with specific investment provisions or chapters. The stated reforms are known the “Africanacity” of IIL. The term is used in the sense of preserving African interests in establishing investment policy, legal and institutional frameworks that govern IIL. There is a surge of IIL. There is a surge of IIL transformation through regionalism in the entire world, and African intergovernmental organizations are not to be left behind as this takes place. It comes at a time when most of the investment agreements in Africa were endorsed during the post-colonial era, the time in which African states were desperate to reinvent their economies. The Continent is establishing its own bragging rights to regulate IIL. The newly formulated IIL norms promote African interests first and foremost. Still, IIL is extraordinarily fragmented and reshaping IIL it an unfortunately complex process leading to a diverse set of instruments with competing norms. It is also a fact that Africans are not used to adopting their own model BITs when entering into agreements with the developed world. The Pan African investment Code (PAIC) represents a Continental consensus in shaping IIL. The Code bequeathed the spirit of Africanacity to most of the newly adopted investment model treaties in Africa. For instance, most of the sub-regional investment model treaties categorically state their overarching objective to enhance investment in sustainable development. Other features include the introduction of investors’ obligations, the promotion and protection of the environment, social development and human rights, transparency, corruption, public scrutiny, economic development, and corporate responsibility. These provisions are rare in the ordinary BITs. In inserting such clauses, policy space is ensured, and national sovereignty and public interest are not undermined at the expense of attracting and protecting foreign investors. International Investment Agreements (IIA) are generally tools for attracting Foreign Direct Investments (FDIs), deepening regional integration, and increasing diplomatic relations with the developed world. Nevertheless, current IIL reforms target laws and policies which are development-oriented and that attempt to strike a balance between investor and host-state rights and investors’ obligations. Thus, the “Africanacity” of IIL is transforming Africa from being “rule-takers” to “rule-makers”. Another key feature of the Africanacity of IIL is the localization of the investor-state dispute settlement system (ISDS). If that is unsuccessful then arbitration can proceed, but it is to be conducted by national institutions using national laws, after “exhausting available remedies”. The primary purpose of this document is to present the existing IIL reforms in Africa. In the process, the contribution will establish the applicability and suitability of the reforms. MODERATE AND RADICAL AFRICANIZATION OF IIL African countries have taken distinct measures to acquire the right to regulate IIL The Africanization of IIL is about the progressive reform and remaking of the IIL regime. African countries have taken distinct measures to acquire the right to regulate IIL It is about giving voice and ownership to the legislative and treaty reforms that center the interests of African states. African states' effort at reforming and remaking IIL span across regional, sub-regional, and national spheres, as well as IIAs or bilateral investment treaties("BITs") between African states. The Afircaniztion of IIL can be classified into moderate and radical Aficanization. Moderate reform is characterizied by modest, steady, incremental, bit by bit reforms of IIL. This approach is cautious and does not ultimately bring any change in the modus operandi and way of doing things. While it is useful it however continues to keep African states under bondage of the already existing laws that undermine and disadvantage the African countries and its communities. The reformulation of Africanization principles in response to critiques sustains the market's fundamental visions of foreign investment law. It projects a positive outcome but it does not benefit the African states wanting to get more mileage from the reform. A moderate form of Africanization reifies and entrenches the core tenets of the received system. However, moderate Africanization has been successful in its agenda for reform. The results of this reform are not readily visible as it gives more or less negative results, if not the changes are very minimal. The moderate Africanization of IIL is caught in a conundrum. The conundrum is exacerbated by the asymmetry and vulnerable status of African states. However slow-moving the change with moderate reform, this method should not entirely be dismissed as useless and unfruitful to the cause that the African states stand for and believe in. The moderate approach needs to be revamped and re-evaluated to ensure the the African countries benefit and are able to level the playing field. Radical reform is more engaging and borders on the extreme way of doing things. In this method the African states are not subject to the Western countries or the foreign investors. It acknowledges that IIAs have enhanced imperial domination and exploitation of host states through the mobilization of treaties, which privileges the usurpation of economic resources in the Third World. A robust pursuit of an agenda for the radical Africanization of IIL would bring about a new international economic order that incorporates the interests of Africa and the Global South on their own terms. The African states more or less call the shots in this reform. They do not feel threatened by terms and conditions where they are made to choose between the foreign investors and their own countries. This approach says it’s our way or no way. Radical Africanization of IIL is ambitious, and its aim extends beyond the geographical boundaries of Africa to other peripheries. It is a revolutionary project that fundamentally requires the remaking of the international economic order that has sustained the subordinating relations between investors and host states. escalating from a modest approach to a radical vision of Africanization that challenges the contemporary international economic and investment order would be ideal for the changes that African states seek. African nations should not allow themselves to be bullied by the rest of the world to agree to laws that are detrimental to the economic growth of the continent and its people. This is a normative call for a more radical Africanization of IIL. African states should continue to seek opportunities to cascade these changes, even in incremental steps, as the opportunities arise. AFRICANIZATION OF INTERNATIONAL INVESTMENT LAW Africa has no legally binding and continent-wide instrument on investment regulation. The international investment regulatory framework is fragmented, consisting of BITs, regional investment agreements, and free trade agreements with investment provisions. Nonetheless, African countries, under the auspices of the African Union (A.U.), have developed and adopted a nonbinding continent wide investment code, the Pan-African Investment Code (PAIC). The PAIC aims to create a balanced investment regime that promotes and protects investments while conserving the policy space for host states. It contains many references and inferences to the right to regulate of host states. The preamble of the PAIC, for instance, expressly refers to the right of A.U. member states to regulate all investment-related aspects within their territories to promote sustainable development objectives. In addition, the PAIC consists of numerous substantive provisions, including the right of host governments to regulate admitted investments in accordance with their laws and regulations, and the right to adopt measures concerning environmental preservation, international peace and security, national security interests, and promoting national development (including through performance requirements and local content). Performance requirements are significant because they can serve as a tool for economic development policies. For instance, requirements for technology transfers or the employment of local workers can help materialize beneficial spillover effects for the host state. Moreover, the PAIC includes a list of exceptions to the application of most-favored-nation treatment (MFN) and national treatment obligations to investors and investments in order to preserve public interests. It is worth mentioning that the implementation of these exceptions does not entitle an investor to compensation for any competitive disadvantages. More importantly, the PAIC contains an entire chapter on investors’ obligations, which is rare in traditional BITs. The PAIC allows host governments to impose certain obligations on investors, including to comply with corporate governance standards, to adhere to sociopolitical obligations, to refrain from bribery, to adhere to corporate social responsibility standards, to use natural resources in a responsible manner, and to comply with business ethics and human rights. The PAIC also comprises provisions regulating state contracts, public-private partnerships, labor issues, human resources development, and the promotion of technology transfer and clean technologies, and environmental and consumer protection. With regard to dispute resolution, the PAIC gives host governments the discretion to implement investor-state dispute settlement (ISDS), thereby offering a middle-ground solution to African states that are either pro-ISDS or anti-ISDS. In contrast, the majority of Africa’s investment treaties do not impose direct obligations on foreign investors, which potentially leads to unregulated investments. Nonetheless, a vast majority of modern investment treaties are increasingly integrating, such as the obligation of foreign investors to comply with all applicable domestic law and measures of the host state. The development of the PAIC was Africa’s attempt to shape international investment treaty in accordance with its own developmental priorities, the so-called Africanization of international law. This was a reaction to the earlier models of investment regulation that have been presumably unfavorable to Africa’s developmental interests As UNECA has noted, the PAIC purports to develop “a business climate to stimulate investment at national, regional and continental levels, and to develop a roadmap and strategy on how African countries can adopt this code to their own context The PAIC is therefore a guiding instrument for African countries in investment policy-making at the continental, regional, and bilateral level. The PAIC can be a useful instrument for the investment protocol for the African Continental Free Trade Agreement (AfCFTA) as well as the investment chapters envisaged in the Tripartite Free Trade Agreement (TFTA). Both the AfCFTA Agreement and TFTA Agreement are intended to be binding instruments. A binding instrument at the continental level guarantees that right to regulate provisions are preserved in new bilateral investment treaties negotiated by African countries. Additionally, a Pan-African wide, binding instrument that allows African countries to speak with a single voice on investment creates leverage when negotiating investment deals with other non-African states and the international business community. African countries have signed and ratified multilateral or plurilateral agreements pertinent to international investment regulation. The ICSID Convention creates the International Centre for Settlement of Investment Disputes (ICSID) and provides for the resolution of investor-state disputes and interstate disputes. Emphasis was placed on concluding investment treaties as instruments for investor protection and promotion. Developing countries (including Africa) were merely investment rule consumers in the North-South BITs. They lacked sufficient capacity to negotiate public policy and development issues into these IIAs, or to analyze the practical legal and policy consequences of negotiating such agreements. Africanization of IIL innovation occurs within the context of IIAs that remain underpinned by a neoliberal agenda. Moderate and incremental reform does not therefore promise the emancipation that African countries seek by the type of reforms undertaken to date. The common features of these instruments include linking the objective of investment promotion and protection to sustainable development; excluding portfolio investments; including provisions on investor-obligations; and reserving wide scope of regulatory space for host-states, including the ability to take emergency measures without incurring liability to investors. Some of these provisions are rare in IIAs. Over the last decade a number of African states have amended their domestic laws in order to have the right to regulate FDI. Foresti v. South Africa is cited as the case that prompted the government of South Africa to take steps to review its investment laws. In that case, foreign investors filed an expropriation claim against SouthAfrica for their mineral rights. The matter was settled on merit. The case faulted South Africa on its expropriation policies. Consequently, the SA government retaliated by beginning to terminate the bulk of its BITs. The review process also recommended an overhaul of its legislative framework. It recommended new pieces of legislation which led to the enactment of several laws concerning investment protection (Protection of Investment Act 22 of 2015), expropriation (Expropriation Act of 2015 and the Property Valuation Act), and arbitration (International Arbitration Act of 2015). In the midst of African protest against the “biased-imperialist” ISDS system, African regional trade agreements have resorted to establishing regional and national mechanisms for adjudicating investment disputes. ISDS mechanisms shield investors from any political pressure that might appear in the domestic forums of a host-state. Debates over the relevance and legitimacy of the ISDS mechanism will never cease, even in the imagination of the author of this article. The resurgence in the development of home-made ISDS mechanisms in Africa is indicative of dissatisfaction of African states with the traditional ISDS. The ECOWAS Supplementary Act clearly protects the citizens of host-states by providing a clause on investors’ liability. Investors can be liable for damage caused due to their actions and decisions. The Act enshrines a more restrictive ISDS mechanism clause. It allows ISDS on the premises through arbitration at national courts or national investment arbitration centres. Simply put, the ECOWAS Supplementary Act completely negates international ISDS mechanisms. The CCIA does not negate ISDS. The investor can opt between domestic courts, the COMESA Court of Justice or international arbitration under ICSID Rules, the ICSID Additional Facility Rules, the UNCITRAL Rules, or the rules of any other arbitral institution agreed to by the parties. There is an increased desire among African nations to avoid arbitration in disputes involving natural resources. It is at this juncture that the spirit of Africanacity finds itself between a rock and a hard place, that is, in trying to attract investors on the one hand and in protecting national interests and natural wealth on the other hand. . It is clear that there is a feeling that the existing ISDS mechanisms are biased. While such assertions might be hard to prove, they need to be addressed in order to protect the legitimacy of IIL. Yet Africa cannot design an IIL system of its own. It must be legitimate and credible to all, globally. Foreign investors may feel that the proposed local ISDS is likely to be equally biased. It is unlikely that a foreign investor will risk investing in a country where there is no guarantee of challenging malpractice before an independent judicial body. There are inconsistencies in the regimes existing on the continent due to differences in the contents of the international investment instruments promulgated by the different RECs, and also differences in the content of IIAs signed by some member-states of the RECs with countries external to the RECs. There are governance gaps and a lack of enforcement in practice, which would undermine the effectiveness of the laws being forged. The Africanised IIL alone would not attract investment if other important determinants, such as critical infrastructure, remain lacking. Also there is under-representation of Africa in the arbitral institutions that develop and enrich the laws, which, if it continues, would undermine the effectiveness of the Africanisation provisions being included in IIAs. There has been strong opposition to ISDS international arbitration among African countries. For policies that enhance manufacturing competitiveness to be effective, institutions in many African countries will have to be transformed to enable them to assume new roles and face new challenges. There are problems in Africa that are deeply embedded in their economic and political structures and attitudes carried over from the previous regimes. The previous regimes were characterized by bureaucracies that hindered the smooth workings of economic activities and efficient use of resources. Institutional reforms cannot be complete without inculcating a new kind of thinking and way of doing things that is commensurate with the new socioeconomic and political conditions. This emphasizes the importance of a change of attitude and behavioural codes of stakeholders in the previous regime to fit into the new environment. Learning by doing in policy formulation will enable the countries in question to be able to prioritize their needs wisely, and in the case of industrial policy, to better design sustainable policies to enhance skills and local entrepreneurship, thus contributing to manufacturing competitiveness. Many firms in Africa lack the knowledge, time and resources to identify their technological needs. They often seek assistance to resolve most of the pertinent issues underlying their own development. There is little effort to learn systematically from past experiences and from the experience of other countries. The importance of governance in the context of policies, strategies and instruments of the manufacturing sector arises from a number of considerations. The environment in which policies have to be made is undergoing a continuous process of change. Recently, however, these changes have been more rapid and more far reaching. Individually and interactively, the changes are necessitating the need to review the way in which individuals and institutions carry out their activities and businesses. This presents enormous challenges to be faced as individuals and institutions alike devise mechanisms and build the capacity to cope with an increasingly dynamic environment. The demand for more informed, more participatory and more precise policy making has increased in the past one and one-half decades. The domain of economic management has expanded to encompass more rigorously the demands for continued macroeconomic stability, foster supply response and enhance efficiency of resource use. Since quitting the IIL system is the least of options available, African states must continue to seek critical junctures to intervene with more meaningful substantive reforms even if moderate that remake the international investment regime in a way that centres their own interests. To truly benefit from such piecemeal approach, there must be a longer and more normative radical strategy to the reforms. Conclusion For many years, African states have positioned themselves as investment rule-takers. This is partly due to the asymmetry in economic balance between the host African countries and the investing nations. Consequently, the imbalance has led to the contemporary transformation of the traditional IIL regime. In return, African states are being caught between the need to attract foreign investors, on the one hand, and the desire to preserve investor state rights and obligations, on the other hand. Nevertheless, the reforms, which intend to reshape the IIL regime, should be taken positively in an effort to regulate IIL towards preserving the host states’ policy space. With the establishment of regional and domestic arbitration institutions in Africa, this might be a gesture that the Continent is somehow attempting to snub ICSID. This article has attempted to provide a summary of the IIAs concluded by African countries at multilateral, continental and regional, and bilateral levels to determine whether the agreements maintain policy space for African countries to pursue their public policy goals. African countries have signed IIAs as incentives for attracting FDI from developed countries. Developed countries, on the other hand, have concluded IIAs to protect their investors and investments from expropriation or nationalization by African governments. Developed countries were investment-rule makers and, accordingly, designed investment treaties that were pro-investor and do not contain substantial provisions on the host state’s right to regulate. African countries, as investment-rule consumers, signed these treaties without careful consideration of their nature and content. This historical account explains the exclusion of policy space in most IIAs executed by African countries with developed countries. At the regional level, only a handful of RECs have regional investment regulations that allow them “to determine appropriate investment policies that address their economic interests and protect the state right to regulate in public interest while, at the same time, defining applicable rules for investment by being rule providers rather than rule takers.” Countries signed BITs without careful consideration for the provisions and traded their regulatory space for investment commitments. In the absence of a binding multilateral treaty on investment, BITs remain the primary source of investment protection in Africa and across the world. This means that BITs form an integral part of Africa’s international investment law regime. Overall, Africa is lagging behind other developing and developed regions when it comes to integrating more policy space into investment treaties. Therefore, incorporating the right to regulate, sustainable development, social investment, and environmental aspects in such instruments has the potential to cement the policy space of African countries in their international investment law.