South Africa was not averse to bilateral investment treaties (BITs), Trade and Industry Minister Dr Rob Davies said on Friday, stating that government would still consider establishing these in future should there be a compelling economic or political reason why a BIT was needed.
Speaking at a breakfast hosted by the South African Chamber of Commerce and Industry, Davies did, however, say that should BITs be established in future, it would most likely be done within an alternative framework.
Cabinet, in 2010, decided to terminate all South Africa’s existing BITs. Following this decision the Promotion and Protection of Investment Bill of 2013 was published for public comment on November 1 that year, aiming to “update and modernise” South Africa’s existing legal framework in respect of foreign and domestic investment.
Discussing this Bill, for which public comment closed at the end of last month, Davies emphasised that there was no agenda to expropriate any foreign investment in South Africa, adding that the process of reviewing BITs was not peculiar to South Africa, as many countries were conducting such reviews.
“We have gone through the debate of nationalisation in this country and it has been made clear that we do not have such a policy in South Africa. Even if someone wanted to nationalise, there is something called the property clause in our Constitution, according to which investments are protected. One is entitled to an equitable compensation if there is an expropriation. It is not something that can be easily changed. In fact, we have substantial and real protection for all investments, domestic as well as foreign in the country’s Constitution,” Davies explained.
He added that government had found that there was no correlation between the existence, or nonexistence, of BITs and the flow of foreign direct investment.
“There are countries with which we have bilateral treaties, but almost no investment. Conversely, there are countries we have no bilateral treaties with countries, such as Japan, the US and India, but we have a significant flow of investment from those countries. Our investment sources are diversified,” Davies explained.
He further pointed out that government had taken the route of a law of general application that would apply to all foreign investments.
“The law provides for protection against expropriation based on the Constitution. It guarantees national treatment and also provides a series of remedies, including a service for amicable solution, access to the court and the Arbitration Act,” Davies concluded.