Africanisation of international investment law for sustainable development: challenges

• Published date: 10 March 2021
• DOI: https://doi.org/10.1108/JITLP-06-2020-0039
• Date: 10 March 2021
• Pages: 42-64
• Subject Matter: Strategy,International business,International business law,Economics,International economics,International trade
• Author: Emmanuel T. Laryea,Oladapo O. Fabusuyi

Africanisation of international

investment law for sustainable

development: challenges

Emmanuel T. Laryea and Oladapo O. Fabusuyi

Faculty of Law, Monash University, Melbourne, Australia

Abstract

Purpose –The purpose of this study is to critically examine the move to Africanise international

investmentlaw (IIL) aimed at promotingsustainable development on the continent.

Design/methodology/approach –The study analyses the move by African countries to “Africanise”IIL

by incorporating specif‌ic and innovative provisions and features in their international investment agreements

(IIAs) for the benef‌it of African economies. This is evidenced by provisions in African regional investment

instruments such as the 2007 Common Market of Eastern and Southern Africa Investment Agreement and the

2008 Economic Community of West African States Supplementary Act on Investments produced by the different

African regional economic communities (RECs), new-generation IIAs such as the 2016 Nigeria-Morocco IIA and

the China-Tanzania IIA and the African Union’s Pan-African Investment Code 2016. The common features of

these instruments include linking the objective of investment promotion and protection to sustainable

development; excluding portfolio investments; including provisions on investor-obligations; and reserving wide

scope of regulatory space for host-states, including the ability to take emergency measures without incurring

liability to investors. Some of these provisions are rare in IIAs.

Findings –The study f‌inds that,while the efforts are commendable, there are real challenges. Firstly,there

are inconsistencies in the regimes existing on the continent due to differences in the contents of the

international investmentinstruments promulgated by the different RECs, and also differences in the content

of IIAs signed by some member-statesof the RECs with countries external to the RECs. Secondly, there are

governance gaps and a lack of enforcement in practice,which would undermine the effectiveness of the laws

being forged.Thirdly, the Africanised IIL alone would notattract investment if other important determinants,

such as critical infrastructure,remain lacking. Fourthly, there is under-representationof Africa in the arbitral

institutions thatdevelop and enrich the laws, which, if it continues,would undermine the effectiveness of the

Africanisationprovisions being included in IIAs.

Research limitations/implications –While the research discusses both law and policy, more is

discussedof the law, owing to space limitation.

Practical implications –It is anticipated that this research will impact the content of the investment

protocol under the African continental free trade area and beyond and will prompt review of existing and

future IIAs by member states of the various RECs to align them for consistency. It is also hoped that this

research will impact the review of variousinvestment instruments of the RECs with the aim of harmonising

them. It is furtherhoped that this research would contribute to addressing the challengesthat militate against

the achievementof the goals of Africanising ILL for sustainable development.

Originality/value –The study is original. It has not been published previously and the authors have

found no existingpublication that addresses the issues covered in this study.

Keywords Africa, Sustainable development, Africanisation, International investment law,

Investment arbitration, Regional economic communities

Paper type Research paper

1. Introduction

There is a sense that African countries are moving from rule-takers to rule-makers in the

f‌ield of international investment law (IIL) (Alschner and Skougarevskiy, 2016;Mbengue,

JITLP

20,1

42

Received22 June 2020

Revised9 December 2020

Accepted29 January 2021

Journalof International Trade

Lawand Policy

Vol.20 No. 1, 2021

pp. 42-64

© Emerald Publishing Limited

1477-0024

DOI 10.1108/JITLP-06-2020-0039

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/1477-0024.htm

2019). This move, which has been referred toas “Africanisation”(Prinsloo, 2012)[1]ofILL,

may be seen in the incorporation of specif‌ic and innovative features in international

investment agreements (IIAs) for the benef‌it of African economies (Mbengue and

Schacherer, 2017). International investment instruments produced by the different African

regional economic communities (RECs), new-generation IIAs [2], such as the 2016 Nigeria-

Morocco bilateral investment treaty (BIT) (Morocco-Nigeria BIT, 2016)[

3] and the African

Union’s Pan-AfricanInvestment Code 2016 (PAIC), point to this trend.

Common features of these instruments include linking the objective of investment

promotion and protection to sustainabledevelopment; excluding portfolio investments from

the def‌inition of foreign investments; and the inclusion of provisions on investors’

obligations. While some of thesefeatures have become part of the global shift in investment

policymaking [4], these innovative provisions originated from Africa long before gaining

currency in global investment treaty practice. As far back as 2007 and 2008, two African

RECs –the Common Market of Eastern and Southern Africa (COMESA)and the Economic

Community of West African States (ECOWAS) –respectively, produced instruments

containing such features.The Investment Agreement for the COMESA Common Investment

Area (2007) (COMESA, 2007) and the ECOWAS Supplementary Act on Investments (2008)

(ECOWAS, 2008) inter alia impose binding obligations on foreign investors, which was a

major departure from existing IIAs at that time [5]. The instruments also linked the

objective of investment promotion and protection to sustainable development; excluded

portfolio investments from the def‌inition of foreign investments; and reserved for host

state’s wide scope of regulatory space, including the ability of taking emergency measures

without incurringliability to investors (Akinkugbe, 2019)[

6].

However, there are challenges to the realisation of the goals of Africanisation of IIL.

Firstly, there are inconsistencies in the regimes existing on the continent, and a lack of

coordination between the instruments of the RECs. Many of the existing IIAs that are

currently in force on the continent are of the older generation type, which are between

African states and Western countries(in Europe and North America). These treaties do not

ref‌lect Africa’s interests; they ref‌lect Western ideals (Mann, 1981). The IIL jurisprudence

that has emerged from the applicationand interpretation of IIAs, together with overarching

customary international law, have mainly ref‌lected Western ideals (Sattorova, 2018). The

current reform of IIL, drivenin part by Western states, stems from a realisation of the biting

effects of the IIL regime on Western nations, which they have largely constructed

(Sornarajah, 2011). Consequently, Africa cannot assume that the reform would necessarily

serve its interests. Secondly, there are governance gaps and a lack of enforcement in

practice, which would undermine the effectiveness of the laws being forged. African

countries tend to have laws on paper with little effect on the ground, and this is a major

challenge. Thirdly,the Africanised IIL alone would not attract investment if other important

determinants, such as critical infrastructure, remain lacking. Africa suffers from a huge

infrastructure-def‌icits, and one of the indices for the attraction of foreign investment is the

presence of necessary infrastructure.Fourthly, there is an under-representation of Africa in

the international investment adjudicatory systems, particularly arbitral institutions that

develop and enrich the laws. If this continues, it would undermine the effectiveness of the

Africanisation provisions being included in IIAs because interpretations and application

may still be seen throughWestern ideals.

This article discusses the efforts by African countriesto imbue the IIL applicable on the

continents with aspects that serve theirinterests, and the challenges to those efforts. To do

so, the article is divided into f‌ive sections, including this introduction. Section 2 provides a

brief discussion of Africa’s investmentclimate. Section 3 discusses the Africanisation of IIL.

International

investment

law

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