Africa must not let disputes with foreign investors undermine its Covid-19 response

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South Africa Headlines News

There is an imminent threat of claims arising from emergency measures, so countries should review how investor-state disputes are handled

In 2012 SA embarked on bold reforms to terminate its old-generation investment treaties, with their infamous investor-state dispute settlement mechanisms. The move came after years of grappling with excessive arbitral awards, lack of transparency in arbitration proceedings, and constrained policy space for its development objectives.

The government has responded to the Covid-19 threat by enacting a full lockdown that has caused severe disruption to the economy. Unfortunately, in crises like these, investor-state arbitrations are often not far behind. After the 2007-2008 global financial crisis, there was a rapid spike in ISDS claims for measures taken by governments to address the financial fallout.

SA has already seen how ISDS can be used to limit the government’s policy space, especially in times of crisis. The BEE programme is an example of a crucial development agenda meant to address some of the economic damage and entrenched inequalities wrought by apartheid. The BEE programme is embedded in key laws, such as the 2004 Mineral & Petroleum Resources Development Act .

Countries will continue to grapple with the direct and indirect effects of Covid-19 for months and years to come. The UN Economic Commission for Africa estimates that 27-million people could be pushed into extreme poverty in the region, while several countries will default on debt payments. African finance ministers have already called for the urgent release of $100bn, of which $44bn would go towards debt relief for all African countries.

 

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