Cape Town – The National Assembly has approved the Promotion and Protection of Investments Bill following an intense debate by Members of Parliament on Tuesday.
This comes after the Portfolio Committee on Trade and Industry passed the Bill, which seeks to clarify the level of protection that investors may expect in the Republic of South Africa and to further ensure that the country remains open to foreign investment.
Tabling the Bill before the House on Tuesday, Trade and Industry Minister Rob Davies said it is aimed at re-assuring investors that South Africa is, and will remain, open to Foreign Direct Investment and will continue to provide strong protection to investors.
“Fundamentally, the underlying philosophy of the Bill is to clarify the standard of protection that an investor may expect in the Republic, and to promote all types of investments by creating a predictable business environment that is readily understandable to an investor.
“The Bill guarantees the rights of investors in accordance with the Constitution,” he said.
Briefing journalists prior to tabling the Bill in the National Assembly, the Minister said government has, for the past three years, undertaken a review of its investment regime.
He said what informed the review was the nature of about 3 000 international investment agreements and bilateral investment treaties that were signed in the 1990s.
The agreements, which were signed before the Constitution came into effect, provided very firm guarantees to investors against direct and indirect expropriation, as well as guarantees against fair and equitable treatment.
Minister Davies said the agreements were formulated and phrased in a way that they were extremely expansive, and this opened doors to litigation and over the past few years, there has been multiple cases where individual investors have taken governments to international courts.
“Our central message is that we have seen over a period of time that the established international investment protection system has been recognised around the world as being in need of serious review and reform.”
Addressing MPs later during the debate, the Minister cited a 2015 Investment Report by UNCTAD, the United Nations Conference on Trade and Development, which revealed that 99 governments around the world have been respondents to one or more known Investor-State Dispute Settlement (ISDS) claims.
According to the report, most cases are brought by claimants in developed countries against developing countries although it is interesting to note that cases against developed countries are increasing.
He said an average cost of defence against claims at almost US$10 million (R120 million) in 2014 but individual cases have generated significantly higher costs including a recent case that cost over US$120 million.
The Minister said it is against this background that South Africa took a decision to review its regime, with similar reforms currently taking place globally.
“In developing the Bill, we have taken into account all the concerns raised. Our aim is to modernise South Africa’s policy approach to foreign investment in view of national, regional and global developments,” he said.
“I should also point out that it is not the intention nor the mandate of the Bill to develop the law in areas that are not directly in the scope of investment regulation.”
He said Section 25 of the Constitution provides adequate protection to investors from arbitrary expropriation and deprivation.
“There is emerging jurisprudence on deprivation, it is not the role of this Bill to clarify and interpret law,” he said.
After the National Assembly gave the Bill a thumbs up by an overwhelming vote, it was sent to the National Council of Provinces (NCOP), where it will be processed before being sent to the President for his final approval. – SAnews.gov.za
