The business interest organisation AfriBusiness noted with concern the activation of the Protection of Investment Act (Act No 22 of 2015) last Friday by President Cyril Ramaphosa. This legislation, which was signed into law by former president Jacob Zuma in December 2015, poses a wide range of concerns.
“We are concerned about the evident intentions associated with the Protection of Investment Act, which appear to be the phasing out bilateral investment treaties (BITs) between South Africa and other countries, amongst others. This is deemed to weaken the protection and guarantees that international investors enjoy,” says Piet le Roux, CEO of AfriBusiness.
Government has already cancelled several BITs and considers cancelling even more of these agreements, such as the investment treaty between Finland and South Africa.
AfriBusiness regards international investment treaties as an important and special layer of additional protection and incentives that are afforded to foreign investors for committing capital to South Africa. These treaties usually confirm general international legal precedents associated with international investments and typically include stipulations of payment of compensation in cases where governments expropriate property.
By seeking to cancel bilateral investment treaties and by affording international investors merely the same increasingly dubious protection that local investors currently enjoy, government is certainly not helping to attract much-needed foreign investment and international capital to South Africa.
“It would indeed be ideal if South African laws assured private property to the degree that it made bilateral investment treaties unnecessary, but the Protection of Investment Act does not attain that goal. The Act strongly emphasises government’s assumed right to regulate property in terms of section 25 of the Constitution and other laws, which already permit expropriation in the public interest given certain requirements,” Le Roux continues.
If government were to drop the standards for the protection of private property further by implementing their policy of expropriation without compensation or by drastically reducing the quantum in the calculation of compensation for expropriation, all investors – including investors not covered by BITs – would be at greater risk..
Note: For further information on considerations of international law associated with investments and an analysis of the Protection of Investment Act, see Part 3 of AfriBusiness’s submission to the Constitutional Review Committee on expropriation without compensation by Prof. Hennie Rossouw, South African Chair in International Law at the University of Johannesburg. The submission may be accessed at the following link.