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A new model bilateral investment treaty for African states

JDSupra | 21 July 2022

A new model bilateral investment treaty for African states

On 12 July 2022, the Africa Arbitration Academy (AAA)1 launched the Bilateral Investment Treaty (BIT) for African States (AAA Model BIT). The AAA Model BIT aims to balance two objectives: the attraction of Foreign Direct Investment (FDI) to African states and the promotion of sustainable development and is intended to serve as a source of cohesion for African states in relation to their Investor-State Dispute Settlement (ISDS) reform strategies and promote the codification of African states’ investment policies and laws. And it’s good timing, the continent is seeing a strong rebound following COVID-19, FDI to African countries hit a record of US$83 billion in 2021 according to the UNCTAD World Investment Report 2022.

Prepared by a Drafting Committee and Technical Review Committee, gathered from a diverse pool of seasoned arbitration practitioners, and investment law experts from Africa and beyond, the AAA Model BIT aims to provide useful guidance to African governments and institutions involved in the negotiation of BITs by seeking to balance the rights and obligations between states and investors.

The AAA Model BIT recognises and reaffirms the state parties’ right to regulate and introduce new measures relating to investments in their territories in order to meet national policy objectives in accordance with established principles of international law.

The drafters of the AAA Model BIT chose the overriding principle of the Model Treaty, as enshrined in Article 1, an African principle – namely that of Ubuntu which is derived from the popular African idiom “Umuntu ngumuntu nga bantu” literally translated as “a person is a person because of what other members of the community have done for him” and “…accords respect to human dignity and equality to any person irrespective of status in a communitarian sense…”.

The very definition of ‘Investor’ in the AAA Model BIT, which limits the scope of application of the Agreement, provides that an ‘Investor’ for the purpose of the agreement undertakes to apply the Ubuntu principle in its dealings with the indigenous communities/nationals in the Territory of the Host State where the Investment is located/operated; the nationals of the Host State and any third-party state or nationals of such third-party state that neighbours or are affected by the Investment in the Host State.

In line with the overarching principle of Ubuntu, the AAA Model BIT objective of enhancement of “sustainable development”2, the protection of human rights3 and the importance of environmental protection4 in Africa are featured throughout the model BIT.

The model BIT also contains specific provisions dealing with:

  • the protection of the collective intellectual property rights, Traditional Knowledge and Traditional Cultural Expressions of indigenous peoples and local/ethnic communities5; and
  • the recognition of the role of gender equality as “a crucial factor to the achievement of economic growth and development”6. In respect of the latter, the AAA Model BIT provides the contracting States “should ensure that the implementation of this Agreement does not create a barrier that could impede the ability of women and other disadvantaged groups to effectively participate in relevant economies”.

It remains to be seen whether the AAA Model BIT will become a new model for investment treaties concluded by African states. It is a welcome contribution to the ISDS space, and one we are particularly proud of at Vinson & Elkins as one of our associates, Ilham Kabbouri, sat on the Drafting Committee.

The aforementioned are only some of the most notable and distinctive features of this new instrument. The AAA Model BIT, which is available in English, French, Portuguese and Arabic can be downloaded here.

1 The AAA was established to meet the rising demand for improved expertise and training of arbitration practitioners in Africa and to expose young African practitioners to the current trends and developments in international commercial and investment arbitration.

2 See preamble, explanatory note on the definition of investment, Article 3 (Promotion of Investments), Article 4 (Non-Discrimination Standards), Article 17 (the Rights of States to Regulate), and Article 18 (Corporate Social Responsibility).

3 See in particular Article 10 (Labour, Human Rights Protection and Gender Equality), paragraphs 1-4.

4 See in particular Article 9 (Environment) which reflects good global practice in environmental management and the incorporation of environmental management systems that can assist in ensuring that not only domestic environmental laws are in fact complied with, but that they also go beyond this to require assessment, ongoing environmental diligence and improvement.

5 See in particular Article 11 (Intellectual Property, and Indigenous Peoples/Communities’ Rights and Resources), Section B.

6 See in particular Article 10 (Labour, Human Rights Protection and Gender Equality), paragraph 5.

 source: JDSupra