DJIBOUTI BECOMES 163RD SIGNATORY OF THE ICSID CONVENTION

The Republic of Djibouti is the latest country to become a signatory to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention).  Djibouti’s Minister of Economy and Finance, Ilyas Moussa Dawaleh, signed the ICSID Convention on 12 April 2019.  Djibouti must now ratify the ICSID Convention in order for it to become a Contracting State (or Member State) to the ICSID Convention, and for the ICISD Convention to come into force for Djibouti.

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ICSID Tribunal declines jurisdiction due to claimants’ failure to obtain environmental impact assessment in breach of local law

In a recent investment arbitration Award, in Cortec Mining v Kenya, an ICSID tribunal has declined jurisdiction over a claim brought by a trio of mining companies on the basis that the mining licences at issue had not been obtained lawfully due to the Claimants’ failure to obtain the required environmental impact assessments.

In its award of 22 October 2018, the tribunal held that the withdrawal of the Claimants’ mining licence by the Kenyan Government could not be challenged under the 1999 UK-Kenya bilateral investment treaty (“BIT“), as the relevant mining licence had not been obtained lawfully. Despite the fact that the BIT contained no express requirement of compliance with local law, the tribunal nevertheless held that the BIT and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1966 (the “ICSID Convention“) protect only lawful investments. The tribunal affirmed that a principle of proportionality should apply when assessing the impact of unlawful conduct on the right to bring a BIT claim, with minor omissions or inadvertent misstatements not precluding the BIT from applying. However, in this case, environmental considerations were of fundamental importance and non-compliance with the protective regulatory framework was a “serious matter” justifying the tribunal in declining jurisdiction.

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Upheaval and uncertainty in mineral regulation in parts of Africa: resurgence of resource nationalism highlights the importance of investment treaty protections

The last few months have seen significant changes to mining regulations in various African states, giving rise to a concern that a regional trend of resource nationalism may be (re-)emerging. In this context it is important for companies associated with the mining sector to be aware of the protection international investment treaties may provide against the impact of resource nationalism on their assets, and how to maximise that protection before risks materialise.  This bulletin briefly considers some of the last few months’ developments, before discussing how companies can use investment treaties to protect themselves against the risks they pose.

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ITLOS rules in favour of Ghana in long-standing maritime dispute with Côte d’Ivoire

On 23 September 2017, a Special Chamber of the International Tribunal for the Law of the Sea (ITLOS) delivered its judgment on the longstanding maritime boundary dispute between Ghana and Côte d’Ivoire.

The Special Chamber reconfirmed the relevance of the equidistance methodology in determining the maritime boundary between the two States. The judgment also touches on important issues affecting States and international companies operating in disputed waters such as the applicable obligations pending resolution of such disputes.
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Is the recently signed Morocco-Nigeria BIT a step towards a more balanced form of intra-African investor protection?

On 3 December 2016, Morocco and Nigeria signed a new bilateral investment treaty (the "BIT"), with the overarching aim of strengthening "the bonds of friendship and cooperation" between the two States.  The BIT (available here) is yet to be ratified and to enter into force. 

The BIT takes an interesting and in some ways innovative approach to the balance of rights and obligations as between investors and the respective host States, placing emphasis on the promotion of sustainable development and expressly safe-guarding the State's discretion to take measures to meet policy objectives.  As compared to traditional investment treaties, the BIT imposes additional obligations on investors and appears to seek to address, to a degree, the criticism that such investment treaties have been too heavily geared towards protecting investor interests. 

We explore below some of the more unusual aspects of the BIT, and consider the innovative nature of the BIT by comparison to other intra and extra-African treaties concluded in recent years.   

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New dispute resolution rules for foreign investors in South Africa

South Africa’s draft regulations for investor-state mediation require refinement to work effectively with international arbitration.

Interested parties have until 28 February 2017 to comment on draft Regulations on Mediation Rules (Regulations) published by South Africa’s Department of Trade and Industry (DTI) on 30 December 2016, under the Protection of Investment Act, 2015 (Act).

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EU trade agreement enters into effect with five southern African countries

On 10 June 2016 the EU signed an Economic Partnership Agreement (EPA) with the Southern Africa Development Community EPA Group comprising Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland (the SADC EPA).

On 10 October 2016 that agreement entered into effect between the EU and five of those countries: with Mozambique in the process of ratifying the agreement and due to join immediately thereafter.

The SADC EPA represents the latest agreement in a scheme to create a free trade area between the EU and the African, Caribbean and Pacific Group of States (ACP).  Like previous EPAs, a key objective is to support the conditions for increasing investment and economic growth in the SADC EPA states. The EU is the SADC EPA Group’s largest trading partner. Export products from the SADC region include, notably, diamonds (from South Africa, Botswana, Lesotho and Namibia) as well as agricultural products, oil and metals. Manufactured goods, wine and food products are exported from South Africa, the largest EU trading partner in the region. EU imports to the SADC EPA Group include vehicles, machinery, electrical equipment, pharmaceuticals and processed food.

The key provisions of the SADC EPA are discussed below.

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New Investor’s Guide to Sierra Leone launched at UN on 10 July 2015

Herbert Smith Freehills, together with the assistance of Standard Chartered and Prudential plc, has produced an Investor’s Guide to Sierra Leone. The Investor’s Guide was launched on 10 July 2015 at the United Nations International Ebola Recovery Conference in New York by the Minister of Trade for Sierra Leone. It represents an independent, private sector perspective on investing in Sierra Leone.

The Guide is split into three parts as follows: (I) investing in Sierra Leone, which takes a look at the policy and legislative framework within which investments are made; (II) an overview of key sectors, including energy, natural resources and agriculture; and (III) the post-Ebola investment climate.

Further information about the Guide and Herbert Smith Freehill’s long-standing involvement with Sierra Leone is found below. A copy of the Investor’s Guide can be downloaded here: http://www.herbertsmithfreehills.com/insights/guides/sierra-leone-an-investors-guide  Continue reading

High Court rules that payment under a guarantee would breach EU Libya sanctions regime, and considers contractual exemption provisions

In a recent judgment, the English High Court has considered some of the exemption language commonly found in EU sanctions regimes which is applicable to contractual performance. The case of Glenn Maud v The Libyan Investment Authority [2015] EWHC 1625 concerned an application to set aside a statutory demand for payment under a guarantee. The court found that payment of the guarantee was prohibited by the sanctions regime, and granted the application to set aside.

The judgment principally concerns the scope of the obligations and prohibitions relating to the freezing and the making available of funds and economic resources to designated persons, particularly in the context of the specific provisions of the EU – Libya sanctions regime. However, it also considered two key questions relevant to the impact of sanctions on contracts, namely (i) the extent of the general exemption for claims under contracts, the performance of which has been affected by sanctions; and (ii) whether there is an obligation to seek a licence from the competent authority before it is possible to rely upon a sanctions prohibition as defeating a contractual obligation. In so doing, helpful guidance was provided on the scope of these provisions which have not frequently been considered by the courts.  Continue reading