How African Countries Approach ISDS Arbitration: Any Effect on the AfCFTA Investment Protocol?

*Written by Talkmore Chidede

Historically, African countries have signed investment treaties, particularly bilateral investment treaties (BITs) to attract foreign direct investment (FDI), as a developmental strategy.  To date, BITs have been executed between African countries (intra-African BITs), with developed countries (traditional/North-South BITs) or with other developing countries outside the continent (South-South BITs). Virtually all BITs contain investment dispute settlement mechanisms including non-judicial means, domestic remedies, diplomatic protection, and investor-state dispute settlement (ISDS) international arbitration. ISDS emerged as the commonly used form of investment dispute resolution by foreign investors. It allows investors to bring proceedings before international ad hoc tribunals against host governments for treaty breaches. BITs commonly cite arbitral institutions such as the International Centre for Settlement of Investment Disputes (ICSID), the United Nations Commission on International Trade Law (UNCITRAL), the Permanent Court of Arbitration (PCA), the London Court of International Arbitration, and the International Chamber of Commerce, among others.

Most traditional BITs give automatic consent to ISDS arbitration. Some (especially modern) BITs grant consent to arbitration on a case-by-case basis. “Under case-by-case consent approach, national laws offer the possibility of ISDS but require additional act of consent by host state government before an ISDS arbitration can go forward”.

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