Bilateral investment treaties in the new constitutional dispensation : the Promotion and Protection of Investment Bill 2013

Abstract

After 1994 the South African government concluded a number of bilateral investment treaties (hereafter referred to as BITs) with the intention of attracting and subsequently increasing levels of foreign direct investment (FDI) into the country. The BITs were concluded in the hope of facilitating economic growth for the country and were intended to assure foreign investors that foreign investments are protected in the new South Africa, especially after the country had been internationally secluded and sanctioned for many years. Some years later South Africa cancelled its BITs with European countries and introduced The Promotion and Protection of Investment Bill 2013 (PPIB) as proposed legislation to replace the BITs for the protection of foreign investments. The PPIB was inspired by the outcome of the review conducted by the government on the BITs South Africa had concluded. The findings of that review were that the BITs were inconsistent with the Constitution of Republic of South Africa, 1996 (Constitution), and for that reason had legal and policy implications for South Africa. In this light, the government concluded that the BITs were unbalanced and that they restricted the government from fulfilling aspects of its constitutional mandate, such as expropriating property and transferring ownership to historically disadvantaged South Africans (HDSA). The government addressed this issue by enacting the PPIB to protect foreign investors' property while at the same time giving the government the power to regulate foreign investment in a manner that allowed it to carry out its mandate under the Constitution. This study examines the contents of the PPIB, attempting to assess if it efficiently balances the property rights envisaged in the Constitution and the rights under the BITs.