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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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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