1. Olasupo Shasore SAN FCIArb October 2015 ARBITRATION IN INVESTOR – STATE DISPUTES IN AFRICA Chartered Institute of Arbitrators Nigeria Branch 2015 Annual Conference Abuja 1

2.  Overview  Investment Treaty Arbitration in Africa  International Standards in African Investment Agreement Emerging Regulatory Picture  Investment Protection Legislation in African States  African Countries and ICSID  The South -South Dilemma  Some African Investment Disputes [in reflection]  The Future 2

3. Pre -International Economic legal order  Inter territorial differences  No harmony and no predictability in trade relations. Bilateral Investment Treaties (BITs)  tool for foreign investment confidence making by creating the foreign investor status  investments substantive protection, including the right to sue host governments in respect of ‘investments’ in the territory of the other contracting state World's first BIT was signed on November 25, 1959 between Pakistan and Germany.  Now 2500+ BITs in force, involving most countries in the world. Influential capital exporting States usually negotiate BITs on the basis of their own "model" texts (such as the US model BIT).  Investment Treaty Arbitration in Africa 3

4. 4 African states have recorded 767 BITs Majority of 622 BITs are between African states and non-African States  Investment Treaty Arbitration in Africa Only 145 BITs are between African States Only 145 BITs are between African States

5. The old case Concerning Certain German Interests in Polish Upper Silesia involving the seizure of a factory by Poland and The Oscar Chinn Case 1934 The PCIJ decided:  state recognition of pre-existing private property claims in territory that no state has previously claimed (terra nullius);  the principle that acquired rights survive state succession and must be respected by the successor state; and,  in cases of military occupation, the principle that immovable private property must be respected. 5  Investment Treaty Arbitration in Africa

6.  Nigeria along with other African States entered into a number of BITs with various countries in order to facilitate reassure and protect Foreign Direct Investment (FDI) depending on Treaty or General International investment law states held to some of the widely accepted standards:  Most Favoured Nation ("MFN") standard;  Fair and Equitable Treatment ("FET") standard;  National Treatment ("NT") standard;  Prevention of Arbitrary and Discriminatory Measures Impairing Investments;  Full Protection and Security standard;  Free Transfer of Funds Relating to Investments;  No expropriation or indirect expropriation without Compensation; and  Compliance with Specific Investment Undertakings.  International Standards in African Investment Agreement 6

7. The Old Way “In the rather distant past, the United States and other rich countries would occasionally act militarily or insist on state-state arbitrations when their investors claimed mistreatment abroad. Later, the United States would threaten (and occasionally act) to cut off aid, vote against loans by multilateral financial institutions to offending countries, and cancel trade preferences....” (Louis T. Wells) Legislation Only few African states do not have investment legislation the leading economies in sub- Sahara examples include - Ghana Investment Protection Centre Act 1994; Ivory Coast Private Investment Code 1959; Kenya Investment Protection Act 2004; Uganda Investment Code 1991; Tanzania Investment Code 1990 and Nigeria’s Nigerian Investment Protection Commission Act 1995. Statutes unilaterally select and consent to arbitration as the method of resolution while referring to ICSID as the venue and or the rules regime to be adopted. Interocean Oil Development Company and Interocean Oil Exploration Company v. Federal Republic of Nigeria (ICSID Case No. ARB/13/20)  Investment Protection Legislation in African States 7

8. The measure was targeted at Africa not for Africa: ‘By the early 1960s, following the wave of decolonization in Africa and parts of Asia, and a wave of take-overs of foreign investments throughout the Third World, it had become apparent that it would be very difficult to achieve consensus on the obligations of host countries toward alien investment (read multinational corporations). The leading international aid institution, the World Bank, began to consider how, on the one hand, it could avoid becoming embroiled in controversies between home and host states concerning expropriation, and on the other hand, how it could assist the resolution of such controversies.... ‘ (Andreas F Lowenfeld, International Economic Law 2008) A & O Lagos Nigeria  Investment Protection Legislation in African States 8

9. Fifteen (15) of the original twenty (20) deposits of the ratification instruments came from African states, and these fifteen original African contracting states were: Benin; Burkina Faso; Central African Republic; Chad; Republic of Congo; Côte d’Ivoire; Gabon; Ghana; Madagascar; Malawi; Mauritania; Nigeria; Sierra Leone; Tunisia and Uganda. As stated above, a total of twenty instruments of ratification were deposited on October 14, 1966. It must be noted that the remaining five (5) original signatories came from; Iceland; Jamaica; Malaysia; Netherlands and The United States. Another important fact was that the very first respondent state in ICSID proceedings was also an African state-- Holiday Inns S.A. & Others v. Morocco (1972) 9  African Countries and ICSID

10. African motives were captured by the statements of the representative of Sierra Leone during the African legal consultative meeting that occurred in Addis Ababa in 1963: “[i]t would be easier for the developing countries to obtain the investments they needed if all agreements contained a clause to the effect that disputes could be referred to the Center [ICSID].” However: “Considering the need for international cooperation for economic development, and the role of private international investment therein; Bearing in mind the possibility that from time to time disputes may arise in connection with such investment between Contracting States and nationals of other Contracting States.”  African Countries and ICSID 10

11.  African Countries and ICSID But to what avail? Since its inception, more than 20% of all ICSID cases involved African states as respondents, with sixteen percent (16%) involving Sub-Saharan states. Only Two percent (2%) of the arbitrators and conciliators have been selected from Sub-Saharan Africa. 11

12. The Calvo Doctrine - aliens are only entitled to national treatment and, therefore, did not recognize an international minimum standard of treatment for alien property The Hull Rule argued that “prompt, adequate and effective compensation” was required under international law. One observer notes: Today, Africa’s largest infrastructure financier is no longer the World Bank—it is China. Indeed, it was back in 2005 that the volume of China’s investment in African infrastructure surpassed that of the World Bank’s. In the decade of 2000, trade between Africa and China alone grew substantially. According to a recent UNCTAD report, the share of Asian Foreign Direct Investment inflows to Africa rose from 6.7% for the period 1995-1999, to 15.2% for the period 2000-2008. Now, a network of at least thirty-five Bilateral Investment Treaties (BITs) purportedly protects China’s enormous investment in Africa. The treaties signed after China’s accession to ICSID in 1993 provide for open access to ICSID arbitration  The South – South Dilemma 12

13. Nigeria There have been 3 cases filed before the ICSID with Nigeria as a party: The basis of ICSID’s jurisdiction is based on the Contract between the parties, Nigeria-Netherlands BIT, and the NIPC Act, respectively.  Guadalupe Gas Products Corp. v. Nigeria (ICSID CASE NO. ARB/78/1). Filed/Registered on: 20 March 1978. Subject-matter: Production & marketing of liquefied natural gas. Basis of Consent: Contract between Parties. Status: Settlement embodied in Award of 22 July 1980.  Shell Nigeria Ultra Deep v. Nigeria (ICSID CASE NO. ARB/07/18). Filed/Registered on: 26 July, 2007. Subject: Hydrocarbon concession. Basis of Consent: Nigeria-Netherlands BIT. Status: Settled & discontinued. 13  Africa in Investment Dispute

14.  Interocean Oil Development Company v. Federal Republic of Nigeria (ICSID Exploration Company v. Federal Republic of Nigeria (ICSID CASE NO. ARB/13/20) Date Registered September 09, 2013; Subject Matter Oil exploration and production joint venture; Date of Constitution of Tribunal Constituted: December 11, 2013 Status: Pending. Kenya  World Duty Free Co. Ltd. v. Republic of Kenya – 2006 ICSID Case No. ARB/00/7, Award (Oct. 4, 2006) This case is very similar to Metal-Tech Ltd. v. Republic of Uzbekistan, ICSID Case No. ARB/10/3. Tanzania  Biwater-Tanzania arbitration: Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award 24 July 2008 14  Africa in Investment Dispute

15. Is there Dispute Security in Africa investment?  Dispute security exists under BIT but African states need to rededicate themselves to the spirit of BIT 338 out of the 767 BITs in Africa 44%, have not entered into force  From the total 767 BITs - 622 were signed between an African and a non-African state - 64% in force 36% are not.  145 BITs signed between two African states, only 20% are in force 80% are not.  Multilateral Investment Agreements COMESA in East Africa represents the only regional African multilateral trade treaty.  BITs are not common enough in practice among African nations bolstering foreign investment protection statutes that confer jurisdiction on the ICSID or other investment dispute resolution methods as a measure of improving the confidence of foreign investors in local countries.  Nigeria has signed 28 BITs but only 13 are in force!!!! 15  The Future

16. What to do with African Investment Legislation? Many African investment statutes need to be reviewed particularly the administrative practices related to their operation; for them to meet modern realities transparency in its operation. How do you solve a problem like China? ICSID is not well equipped to handle south-south trade conflicts, especially within the context of growing Chinese business expansion into Nigeria and Africa, we suggest the adoption of the tripartite partnership of deploying a novel, interactive approach to legal capacity building as proposed by the International Centre for Trade and Sustainable Development (ICTSD), the World Trade Organization (WTO) and the Advisory Centre on WTO Law (ACWL): a)Training through South-South exchange; b)Focus on the practical challenges of dispute settlement; and c)Three organisation cooperation. 16  The Future

17. ICSID Supremacy?  The experience has not created entirely inclusive demographics for Africa. ICSID jurisdiction was targeted at protecting developed country investors from places like Africa not vice versa.  African State governments can now make these observations known to the World Bank community, observations of representation, selection, participation and the trend of African related decisions emanating from the Tribunals. International Commercial Arbitration & International Investment Arbitration  It is true that they are not identical measures but as Africa increasing gains a foothold in the resources expertise and knowledge competence that allows for its greater participation in International commercial arbitration.  It is absolutely crucial for practitioners and arbitral bodies to emphasise equal attention to investment dispute arbitration and its nuances. No doubt the Chartered Institute of Arbitrators Nigeria Branch will – Lead the way! 17  The Future

18. The Last Slide 18