INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 31
INVESTOR-TO -STAT E DI SPUT E SE T T LEMENT IN AFRI C A – A MI XED P I CTURE
BY SIMON SCHOOLING, LEGAL DIRECTOR AT CLYDE & CO
Domestic legislation also seems to be the basis for jurisdiction in the ongoing ICSID case of BSG Resources v Republic of Guinea , and ICSID records suggest the claimants in that case rely for jurisdiction upon Guinea’s investment laws of 1987 and 1995. The case is in its early stages, and it remains to be seenwhether any jurisdictional challenges of the type seen in Interoceanwill be attempted. The case has attracted significant media attention, not least because it will be a test of the appropriateness of ISDS in circumstances where the government alleges that the claimant’s licences were acquired fraudulently. In the ongoing ICSID case of Standard Chartered Bank (Hong Kong) Limited v Tanzania Electric Supply Company Limited (TAN E SCO) , the respondent is a state-owned entity and ICSID jurisdiction was claimed by reference to contract. However, in April 2014 the High Court in Tanzania issued an injunction requiring the parties to refrain frompursuing ICSID proceedings. That decision has attractedmixed comments, andwhile it is seen by some as unwarranted interference in ICSID arbitral proceedings which by their nature are not subject to the supervision of any national court, others have seen the ruling as confined to its particular facts and have sought to defend it as being a useful endorsement of the general principle that the Tanzanian courts will agree to respect the parties’ decision to arbitrate. Similar uncertainties prevail in the sphere of African BITs. It is something of a curiosity that although China has BITs with approximately 130 countries, it currently has relatively fewwith African countries despite its increasing investment in Africa. Looking ahead, time will run out for Africa’s BITs with individual EU countries, since EU-level agreements are due eventually to replace existing BITs. The nature of the ISDS provision in those future BITs will depend not only on the debate currently intensifying in Europe and the US, but also on evolving sentiment in Africa.
Just as the proposed Transatlantic Trade and Investment Partnership (TTIP) is currently causing intense arguments in Europe and North America about the role of Investor-to-State Dispute Settlement (ISDS), so too in recent times has the role of ISDS been under scrutiny in Africa. In southern Africa at least, the landscape has been dominated by the aftermath of the 2008 case of Mike Campbell (PUT) Ltd and others v Republic of Zimbabwe, a case brought in the South African Development Community Tribunal, sitting in Namibia. In that case, the claims against Zimbabwe of dozens of co- claimant farmers alleging expropriationwere upheld. However, as a result of the ruling, political pressure was successfully brought to bear to disempower the SADC Tribunal. Due to the wide nature of its remit, the demise of the SADC Tribunal sparked concern far beyond investment circles but it is fromwithin the business community that legal challenges are nowbeing pursued. A diamondmining companywhose leases were cancelled by the Lesotho government in 1991 andwhich failed to secure compensation through the Lesotho courts, took its case to the SADC Tribunal but found that its case there became barred upon the disbandment of the SADC Tribunal. Now, relying on the SADC Protocol on Finance and Investment, the company is reported to be alleging in an arbitral claim that Lesotho’s participation in the disbandment of the SADC Tribunal constitutes an actionable wrong. The decision in that case is expected after the hearing later this year, andmaywell have interesting implications for potential claimants relating to investment anywhere in the 15member countries of SADC. While it is well known that bilateral investment treaties (BITs) provide for ISDS through the International Centre for Settlement of Investment Disputes (ICSID), another approach adopted by some African countries has been to incorporate into their domestic investment protection legislation a right for investors to bring claims at ICSID. The ICSID case of Interocean Oil Development Company and Interocean Oil E xploration Company v Federal Republic of Nigeria was registered by claimants who argued that the Nigerian Investment Promotion Commission Act of 1995 conferred ICSID jurisdiction on certain disputes between non-Nigerian investors and the State of Nigeria. Nigeria however disputed jurisdiction, arguing that the reference to ICSID in the Act did not confer ICSID jurisdiction or ICSID administration, but wasmerely the identification of the rules to be applied. In rejecting this in a decision of October 2014, the Tribunal found that “there is nothing novel about consent to ICSID being granted through national legislation” and viewed the wording of the Act as “a standing written offer to arbitration to anyone with a claimunder the Act” which the claimants had accepted by filing their request with ICSID. The claimants’ USD 650million claim is currently progressing through the further stages of arbitration.
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