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South Africa's new bilateral investment treaty policy : a reasonable response to a flawed regime? Steenkamp, Tania

Abstract

In 2010 South Africa officially adopted a new Bilateral Investment Treaty Policy. The new policy brought to an end a policy review process that was initiated following an investor-State arbitration concerning legislation introduced in the South African mining sector, aimed at promoting equality in South African society, which allegedly breached South Africa’s international obligations in terms of the country’s Bilateral Investment Treaties with Italy and the Belgo-Luxemburg Economic Union respectively. South Africa’s new policy was introduced in the wake of various concerns that have been raised against the investment law regime, specifically with regard to the way in which earlier Bilateral Investment Treaties limited a State’s right to regulate, which could, in turn, negatively impact on a State’s right to development. One of the main limitations on a State’s right to regulate is the overly expansive application of the provision prohibiting expropriation of investments of foreign investors. If applied to any form of taking, including takings resulting from proportional and non-discriminatory regulatory measures that are in the public interest, States face the risk of their actions being challenged in investor-State arbitration. If such an arbitration tribunal finds the disputed regulatory measures to violate a State’s international obligations, States who have not drafted their Bilateral Investment Treaties carefully, will be forced to pay compensation to the investor based solely on the market value of the investment in terms of the standard of paying prompt, adequate and effective compensation. This thesis considers South Africa’s new policy against the background of these concerns. It focuses specifically on the standard for expropriation, the standard of compensation for expropriation and the role of investor-State arbitration in investment law. South Africa’s policy is placed in context through consideration of the Bilateral Investment Treaty policies of Canada and Brazil. Finally, through a study of various treaty models, the thesis considers ways in which these potentially problematic provisions could be drafted to address the concerns raised by South Africa. The thesis concludes that, despite legitimate concerns about the implementation of South Africa’s new policy, the policy itself is reasonable and appropriate in light of the country’s domestic priorities.

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Attribution-NonCommercial-NoDerivs 2.5 Canada

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