Tag Archive | Protection of Investment

International Arbitration Bill to replace BITs

Arbitration Bill gets SA in line with UNCTRAL …..

global trade graphicThe tabling of the International Arbitration Bill in Parliament will see ‘normalisation’ on a number of issues regarding arbitration between foreign companies operating in South Africa. This is if the Department of Trade and Industry (DTI) policy recently expressed in Parliament by Minister of Trade and Industry, Rob Davies, is to be understood.

The Bill, as is the case with all international legal matters, will  be tabled by the Minister of Justice and Constitutional Development according to a government notice recently published.      Not all investors are necessarily impressed however, some preferring state-to-state bilateral trade treaties (BITs).   South Africa is now adopting the broader approach adopted by some international countries, including China.

Allowing arbitration outside of local courts

As far as is understood, as non-legal observers, formal agreement on the allowance on arbitration proceduresarbitration according to agreed procedures between trading parties will be instituted and local court procedures can be avoided if so wished.  The fact that South Africa has also very recently announced the launch of the China Africa Joint Arbitration Centre (CAJAC), “symbolising the deepening economic relationship between China and African economies”, seems to provide a background to the proposed Bill.

The route now to be followed by South Africa, it appears, is one of a number of limited ways that can improve access to justice services for companies doing business outside the country and foreign companies operating in South Africa and this seems to be the basis of DTI thought on the matter.

Down the track

Legal advice is better followed but a draft Bill it would now appear is being concluded in parliamentary terms.

unictral 1Such arbitration methods have terms which are non-country-specific.  In terms of adoption, the standards of ethical conduct devised by the UN trade body, the UN Commission on International Trade Law (UNCTRAL) and its manifesto, according to the background of the draft Bill, have been included.

BITs on way out

International arbitration can then be operated,it is proposed, between companies or individuals in different states usually by including a provision for future disputes in a contract with UNCTRAL. This is the next stage of the DTI’s moves to finalize the policy of discontinuation of bi-lateral trade agreements (BITs) with individual countries. The whole issue is based upon disputes that may arise and the new Bill now before Parliament follows the new route, which may mollify those parties complaining of BITs discontinuation.

More importantly DTI states, it lines South Africa up with the Model Law on International Commercial Arbitration, which has been adopted by UNCTRAL.   This model law is not binding but individual states may adopt such legislation by incorporating it into their own domestic law, which is now proposed.

It is understood that the current legislation could bind South Africa as a UN member of UNCTRAL but the rules to be adopted are a separate issue at the moment and will govern individual companies in any dispute that may arise under the new circumstances.

Again, specialist advice should be sought on this whole subject.

Previous articles on category subject

Protection of Investment Bill finally passed – ParlyReportSA

Changes to Protection of Investment Bill – ParlyReportSA

Promotion and Protection of Investment Bill re-tabled

Promotion and Protection of Investment Bill opens up major row – ParlyReportSA

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