European/Southern African Development Community (SADC) states' bilateral investment agreements (BITs) for the promotion and protection of foreign investments vs post‐apartheid SADC economic and social reconstruction policy

• Pages: 213-242
• Published date: 13 September 2011
• DOI: https://doi.org/10.1108/14770021111165508
• Date: 13 September 2011
• Author: Ben Chigara
• Subject Matter: Economics

European/Southern African

Development Community (SADC)

states’ bilateral investment

agreements (BITs) for the

promotion and protection

of foreign investments vs

post-apartheid SADC economic

and social reconstruction policy

Ben Chigara

Brunel Law School, Brunel University, London, UK

Abstract

Purpose – This article aims to examine the sustainability of European and SADC states’ practice of

agreeing bilateral investment agreements (BITs) for the promotion and protection of foreign

investments in light of the latter’s recent inauguration of Black Economic Empowerment (BEE) as a

basic norm of regional customary international law and strategy for countering the social and

economic legacy of apartheid rule on their territories for over half a century.

Design/methodology/approach – The approach taken is textual analysis and deconstruction of

emergent SADC BEE legislation, substantive BIT legislation provisions, dispute settlement

mechanisms and emergent jurisprudence on the tensions between BEE policy and BIT obligations.

Findings – The strong elements of exclusivity between European/SADC BIT dispute settlement

mechanisms on the one hand, and the “ouster clauses” of SADC BEE legislation and regulations on the

other, are mutually incompatible. This incompatibility threatens the sustainability of the EU/SADC

states’ BIT dynamic for the promotion and protection of foreign direct investments (FDIs).

Originality/value – Demonstration of BEE as SADC’s emergent basic norm of social reconstruction

for countering the social and economic legacy of apartheid rule in affected states and implications

of that for EU/SADC policy on the promotion and protection of FDIs.

Keywords Foreign directinvestment, Basic norm, Black economicempowerment,

Customary international law-making,Settlement of investment disputes,

Social and economiclegacy of apartheid rule, Internationalinvestments, International law, Europe,

South Africa

Paper type Research paper

I. Overview

SADC states have steadily inaugurated Black Economic Empowerment (BEE) as a

regional norm of customary international law (CIL)[1] and strategy to counter

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1477-0024.htm

Unless otherwise stated, all internet sources were last accessed on (3 May 2011). Treaty

Establishing the Southern African Development Community, 5 RADIC (1993) p.415.

The author is grateful to Dr Richard Frimpong Oppong for his comments on an earlier draft.

The contents of the article are attributable to the writer alone.

European/SADC

states’ BITs

213

Journal of International Trade Law

and Policy

Vol. 10 No. 3, 2011

pp. 213-242

qEmerald Group Publishing Limited

1477-0024

DOI 10.1108/14770021111165508

the economic and social legacy of apartheid rule for over half a century on their

territories. BEE is habitually justified on practical and juristic grounds. Severe

apartheid policies in some member states parties of the SADC had vandalised and

scandalised Black populations and reduced them to quasi-slaves for the settler

European population. The United Nations (UN) steadily outlawed apartheid rule by

legislating against it through treaties and declarations that eventually culminate d in

the inauguration of jus cogens, namely, a norm so critical to international order that no

state is permitted to derogate from it. UN legislation that served to expedite this

process includes the International Convention on the Elimination of All Forms of

Racial Discrimination (1965)[2]; International Convention on the Suppression and

Punishment of the Crime of Apartheid (1973)[3]; and The International Convention

against Apartheid in Sports (1985)[4].

Dugard (2008) arguably the foremost commentator on this subject has observed

that:

Apartheid was annually condemned by the General Assembly as contrary to Articles 55 and

56 of the Charter of the United Nations from 1952 until 1990; and was regularly condemned

by the Security Council after 1960. In 1966, the General Assembly labelled apartheid as a

crime against humanity (resolution 2202 A (XXI) of 16 December 1966) and in 1984 the

Security Council endorsed this determination (resolution 556 (1984) of 23 October 1984).

The Apartheid Convention was the ultimate step in the condemnation of apartheid as it not

only declared that apartheid was unlawful because it violated the Charter of the United

Nations, but in addition it declared apartheid to be criminal. The Apartheid Convention was

adopted by the General Assembly on 30 November 1973, by 91 votes in favour, four against

(Portugal, South Africa, the United Kingdom and the United States) and 26 abstentions.

It came into force on 18 July 1976. As of August 2008, it has been ratified by 107 States.

To have attracted this amount of negative and even hostile attention of the organs of the

UN – from the General Assembly to the Security Council; and to have become one of

the standing features on the annual reviews of UN agencies, apartheid policies in the

SADC must have approached dire, even diabolical proportions. Particularly in Rhodesia

(Zimbabwe), South West Africa (Namibia), and South Africa, the social and economic

legacy of apartheid rule are still dominant and in some cases resilient enough against the

policies of the new democratic dispensation. This situation threatens the possible

achievement of the decency and normalcy that had been hoped for through UN

criminalisation of apartheid. Therefore, European nations that enter bilateral

investment agreements (BITs) for the promotion and protection of foreign

investments with SADC states may do well to note this challenge and perhaps incline

themselves toward facilitation of BEE policies rather than prioritise the pursuit of their

own national interests (Henkin, 1979; Kocs, 1994).

The continuing legacy of apartheid rule in the SADC is summed up in a speech

of 28 July 2004 to the joint Namibia Economic Society and Friedrich Ebert Stiftung

breakfast meeting by Namibia’s Prime Minister – Theo-Ben Gurirab. In it he is

unequivocal that the economic and social legacy of apartheid rule in the SADC is

enormously salient, dominant and resilient. Therefore, political freedom’s foremost

concern should be to dismantle that legacy and annihilate that resilience. BEE policies

are the inevitable consequence of that situation:

The past iniquities wrought upon our country and people were vicious acts of exclusion,

selfishness and denial of the ideals of equality, democracy, rule of law and justice to

JITLP

10,3

214