South Africa investment law overhaul sparks concerns

A new South African investment law should come into force next year to replace a raft of individual, 20-year-old treaties but foreign investors are adequately protected and have nothing to fear, trade minister Rob Davies said on Monday.

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Pretoria let bilateral treaties agreed with European nations shortly before the end of apartheid lapse last month, to the concern of some foreign investors who are unsure whether the replacement law will offer the same protections.
The draft Promotion and Protection of Investment Bill, published last week, rolls over existing guarantees against state seizure of assets but narrows the definition of expropriation, analysts say.
It also removes the explicit possibility of recourse to international arbitration in the event of a dispute.
"If you wanted to sue, you would have to sue them in the South African domestic courts or take them to domestic arbitration," said Peter Leon of Johannesburg-based law firm Webber Wentzel.
"International arbitration is a very important issue for investors. It gives one access to an independent forum which is not connected with the state."
However, Davies insisted the bill was fair and balanced the interests of the public with those of investors in Africa's biggest economy.
"The bill confirms that South Africa remains open to foreign investment. It does not impose any new obligations on investors," he told a media briefing.
"Experience over the world shows that bilateral investment treaties are not decisive in decisions to invest or not in any jurisdiction."
European nations affected by the lapse in bilateral treaties include Germany, Spain, Belgium and Switzerland. Europe accounts for around three-quarters of all foreign direct investment in South Africa, although Pretoria has been pushing hard to attract capital from other big emerging markets such as China and Brazil.