Promotion and Protection of Investment Bill [B18-2015]: flagged clauses

Meeting report

Committee Business: Textiles and local content
The Chairperson explained that Mr Hill-Lewis and Mr Macpherson had raised textiles and local content with the Director General and the Minister. The Minister had indicated during a Committee meeting that the DTI would strive to make it easier for businesses to comply. A letter from the DG explained that, while textile products such as towels were legislated to have to be 100% local product, this has been impossible. For example, towels have only been 97% local product. The specific percentages for the local versus imported materials in various products are available. However, amounts of imported contents have been low across the board. The Chairperson asked if the DA could confirm that it is happy with the DTI’s response.

Mr D Macpherson (DA) accepted the response and called for the Committee to discuss the matter in order to recognise the hard work the DTI has done on the matter. He reminded the Committee that he owns a textile business. He thought that the Committee should address these local content measures and the impact that they may have on the industry. He hoped that the matter would be discussed in the Fourth Term.

The Chairperson noted that the Fourth Term is largely booked up, but that the Whip would look into it. Textiles may have to be taken up next year.

Committee Business: Centurion Aerospace Village
The Chairperson explained that on the matter of the Centurion Aerospace Village (CAV), the DA had requested a redacted copy.

Mr Macpherson explained that the DA now possesses a redacted copy of the report that he wished to table for the Committee. He hoped to get comment from the Minister and hopefully to get the unedited report in addition to comment.

The Chairperson commented that the media has given the CAV issue little attention. This issue of redaction came up on a different matter with Mr Hill-Lewis. The advice sought at the time explained that ‘the DTI refused full access on a number of grounds in full compliance with the Promotion of Access to Information Act. The requestor should have been informed of the grounds for the refusal’.

Mr Macpherson clarified that MP Patrick Atkinson was the requestor of the document.

The Chairperson explained that the requestor could submit an appeal for the release of this information.

Mr Macpherson asked to table the redacted report at some point and requested that the Minister come to the Committee to explain the report and the project. The location of the project, which Mr Macpherson has personally seen, is an empty piece of land. The project has been given 100 million Rand, thus he wanted the Minister to take the Committee into the Minister’s confidence and explain the issues with the project.

The Chairperson explained that the Committee has been aware of investigation into this matter prior to this term. These investigations led to the pursuit of criminal charges against former members of staff, though these matters have not yet been concluded yet. The Chairperson would not request the DG to engage with this matter, but she agreed to ask the Minister during a broad engagement on the state of these affairs. In the past, the Minister has been able to clean out such problems in the Department.

Mr Macpherson appreciated the Chairperson’s serious response to the matter. He welcomed engagement from the Minister and asked for the letter from the advocate explaining the redaction. When the future meeting occurs, he would table the redacted report.

The Chairperson noted that any Member is welcome to attend any meeting, so if Mr Atkinson would like to attend that future meeting he can. She asked that, if anyone receives word from the National Payment Distribution Agency, including the DTI, to notify her. She had requested a clarification with respect to the National Credit Regulator and the challenges facing the debt counseling industry as a result of certain measures. This matter did not come to the Committee directly.                                                                                                                                          

Promotion and Protection of Investment Bill - flagged clauses
Mr Lionel October, DTI Director General, read out a letter from Unilever which was procured in response to doubts about foreign business’s lack of confidence in the investment climate in South Africa. The letter said that Unilever, with the help of DTI, has invested R4 billion in South Africa over the past four years and Unilever employs 3 000 people and has four new plants here. Tax incentives and the Manufacturing Competitiveness Enhancement Programme (MCEP) have helped keep Unilever here even without a UK bilateral investment treaty (BIT). Protections must combine with incentives to attract FDI. The sense that investors are leaving the country is untrue; the opposite is true.

Mr Macpherson pointed to a tweet from the US Ambassador about an ANC media brief accusing the US African Growth and Opportunity Act (AGOA) of being colonisation. The US Ambassador noted that one-way trade benefitting only South Africa is not colonisation. Mr Macpherson called for government to strive to send out one clear message, and to unilaterally invite investment.

Mr A Williams (ANC) said that party political matters do not apply to this Committee; political parties are free to say what they want.

Mr M Kolako (ANC) agreed with Mr Williams that the Committee should not devolve into political matters and commented that the DA frequently has a very negative message and should strive to join government in proliferating a positive message about South Africa.

The Chairperson closed this discussion.

Clause 1 Definitions
The Chairperson said that the first issue to discuss was the definition of ‘measures’. She called on Mr Hill-Lewis to comment on the revised definition.

‘measures’
Mr G Hill-Lewis (DA) said that he was comfortable with the DTI’s proposed edit to this definition.

‘organ of state’
Mr Mustaqeem De Gama, Director at ITED and Chief Counsellor from the SA Mission to the WTO in Geneva, said binding governmental action relates to any organ of state. The Constitution defines organ of state in Section 239; the definition not only relates to departments of state and administration at all levels of government, but also to any other institution that exercises a power from the Constitution. The DTI thus feels that this definition is sufficient and that the terms ‘governmental action’ and ‘organ of state’ do not conflict.

Mr M Kolako (ANC) said that this explanation satisfies the Committee.

Clause 3 Interpretation of Act
The Chairperson noted that this flagged clause also involved the Bill of Rights from the Constitution.

The Chairperson welcomed Mr Matiase from the EFF.

Mr De Gama indicated that the modifications to the Interpretation clause included the addition of a reference to Section 39 of the Constitution. He called for discussion of the necessity of the phrase ‘other rights in the Bill of Rights’.

Ms Xolelwa Mlumbi-Peter: DDG of ITED called for subsection (ii) to read ‘the interpretation of the Bill of Rights…”.

The Chairperson moved to consider the edits made yesterday to sub-clause (c) regarding holdings, acquisitions, and mergers. The Committee agreed on these edits.

Mr A Alberts (FF+) brought up the matter of protections for South African investors abroad. He pointed out that expropriation is legal internationally. He moved to make government’s protection of investments abroad a mandatory right lest government pick and choose whom it defends.

Mr October did not oppose the principle of protecting investments abroad but was not sure of the legality of such a notion. Perhaps the Preamble could reference this, but he reminded the Committee that South Africa only has jurisdiction within the Republic.

The Chairperson observed that this is an issue of international law, especially considering that the government has encouraged citizens to invest in neighbouring African countries. This matter is extremely nuanced and will require study by the legal advisors. She called for study on where else this is being addressed.

Mr Macpherson welcomed progress on this. He said that protecting investments abroad was a duty just as much as protecting investments here is. He hoped that a rewording to include this issue would occur.

Ms Mlumbi-Peter agreed that South Africa’s biggest investment is in Africa. She referenced the SADC Finance and Investment Protocol as well as an Africa-wide Investment protection regime. She also said that Cabinet has not completely rejected the notion of creating BITs in the future; government is working on a Model BIT. This Bill focuses on investment in South Africa.

Mr October said that some people call South Africa’s investment in the continent ‘disinvestment’. The message should be clear that SA’s improving balance of payments, as indicated by the Minister of Finance in his Budget Bill, has led to the realisation that most of it is from profit repatriation from continental investment. South African companies are the largest investor in the continent. MTN is the biggest taxpayer in Nigeria. Foreign earnings come from exports and profit repatriation, so this situation is a net gain for the Republic. The DTI would fully support incorporating a message into this Bill. Rooibos tea and Karoo lamb got protection and geographical indicator status with the EU after they were threatened.

Clause 4 Purpose
The Committee agreed to the edits made to the drafting yesterday.

Clause 6 Right of Establishment
The Chairperson noted that a proposal to significantly shorten this clause had been made yesterday.

Mr Macpherson said that he approved of the edits made to Clause 6(1) but found 6(2) to be unnecessary. He reminded the Committee of his opinion from yesterday that 6(2) comes across as hostile. He felt that 6(1) covers 6(2).

Mr De Gama welcomed Mr Macpherson’s points and explained that the language in the clause reflects international terms of art. Regardless of language in the Bill, the government will have the right to regulate. However, if the language offends, it can be removed.

Mr Hill-Lewis asked if the language could read something like ‘the government will follow a post-establishment regime’ to reflect Mr De Gama’s explanation of pre and post establishment regimes yesterday.

The Chairperson asked Mr Hill-Lewis and Mr De Gama to discuss this matter informally.

Mr Kolako agreed that 6(1) is sufficient, but the clause needs to be clear that not just anyone can come and set up business in the Republic.

Mr October accepted that tone and messaging is key and that 6(2) should be removed. He said that the DTI would attempt to weave in a reference to post-establishment somewhere in the Bill if it is possible.

The Chairperson observed that the matter of Establishment is thus not entirely closed.

Ms Phumelele Ngema: Parliamentary Legal Advisor noted that, if post establishment is added, it would need to be defined in the definitions section.

Clause 5 Application
The Chairperson noted the language change to: ‘This Act applies to all lawful investments in the Republic’. She asked if the legal advisors foresaw any other interpretations on the matter of ‘national legislation’ versus ‘lawful’. She referenced a rule that penalties and sanctions from the Court can punish a company chairperson who is ignorant of legal advice.

Ms Ngema was inclined to state that ‘lawful’ was broader and thus extends from local law to international law. It may be difficult to contain disputes to the intention of the legislature.

Mr De Gama said that if the reference to ‘lawful investments’ is read along with Clause 2, it is clear that unlawful investments such as bribery would not be protected. Even if the Committee removes a reference to national legislation in this context, the DTI still feels that this must be read in conjunction with sub-section (2) that says ‘in accordance with the laws of the Republic’. Thus, the language is perfectly clear and the Bill has interpretive efficiency.

Mr Hill-Lewis said that his selection of the word ‘lawful’ was off the cuff; his main complaint was the insinuation that there is a class of investment that is not subject to national legislation.

Mr Alberts was content with the definition of ‘lawful’; he suggested that an obligation to protect foreign investment be inserted here. He was not advocating for extra-territorial jurisdiction by government or for imposing obligations on foreign governments. He suggested that where the sentence ends, it should continue and say ‘and confirms the government’s obligations with regards to South African investors outside of the Republic’. This would link on to a further proposed expansion of a later clause. There was a statement by a Minister of Foreign Affairs a few years ago on a parliamentary question where that Minister answered how he or she would protect investment outside of SA. The answer read that: ‘The SA Government would continue to ensure the safety and security of all its citizens as well as their property in foreign countries’. This language should be put in this Bill. To cover investments in countries not covered by treaties, all Mr Alberts asked was that government be required to intervene diplomatically and then through international arbitration. Though DTI has clearly been willing to do this in the past, legislating this will require other government departments to contribute as well.

Mr N Matiase (EFF) saw the Bill as welcome by the EFF and saw it as moving in the right direction. He saw the language of the Bill as liberal and not as disastrous as the DA makes it seem. The Bill does not aim to put origin, colour, or ideologies in the forefront, but rather looks at all investments equally. The Bill seeks to regulate the consequences from old BITs and a laissez-faire system that has resulted in illicit flows and other illegal practices. SA’s market needs foreign competition to help development. The DA’s ancestors used state-owned industries to help develop poor white farmers through foreign investments.

Adv Allan Small: Senior State Law Advisor, asked for a specific timeline for a response on the matter of ‘lawful’.

The Chairperson asked for that answer by 10 October. Clause 5 would be the first flagged clause to be tackled at the next meeting taking place in October.

Mr Macpherson expressed frustration that, at this late stage in the Bill, the EFF wants to make submission. Will deliberations on the Bill have to start over for the EFF? The lack of participation from the EFF is going to create a problem.

The Chairperson assured the Committee that the process of flagging and consideration would continue. Parliament allows any member to participate in the Bill. A vote would be recorded proportionally. The Chairperson does not involve herself in party matters or attendance.

Mr Hill-Lewis felt that the primary job of members is to process legislation. Comments from the EFF at this late stage in the Bill are not helpful.

Mr Williams said that the EFF was elected and that their engagement is welcome. The Committee has waited for DA members to arrive in the past and considered their issues; the DA should allow the EFF the same consideration.

The Chairperson agreed that all views are welcome and she encouraged meeting attendance as frequently as possible. She asked for the response from the legal advisors to be forwarded to her or her secretary.

Clause 7 National Treatment
The Chairperson asked the DTI what exactly was the issue with National Treatment. She recalled concern around policy for extra protection.

Mr Hill-Lewis reminded the Committee that yesterday’s discussion centered on principle rather than wording. He said that the current clause does not sufficiently achieve the goal of the Bill. He had prepared an additional clause to propose and emailed it to the committee secretaries.

The Chairperson confirmed that Mr Hill-Lewis was proposing adding a clause.

Mr Hill-Lewis said that Clause7(2)(d) made little sense; 7(4) initially seems positive, but 7(4)(g) does not seem like a preference or privilege.

Mr October replied that every investor wants this national treatment protection lest national companies be favoured. If MTN operates in Nigeria, it must be treated as though it is a Nigerian company. Investors must have the certainty that they will never be discriminated against. The exceptions strive to help transform the economy into a non-racial structure; this is why the government’s right to regulate is key.

Mr Hill-Lewis clarified that he did not object to national treatment, but he also wanted a standard beyond that.

Mr J Esterhuizen (IFP) said that this Bill is not itself a concern, but when it is considered with other bills in Parliament currently, it becomes concerning. For example, the Private Security Industry Regulatory Amendment Bill requires 51% ownership to be South African. The new Expropriation Bill could apply to houses, companies, etc. All this goes to show that, when national treatment applies and foreign investors are subject to national legislation, foreign investors will disinvest.

Mr Kolako said that complaining about other bills is not productive. He asked for the DTI’s opinion on Clause 7(2)(d) and 7(4)(g) in order to move matters forward.

Mr De Gama explained that at the heart of the Constitution is the equality principle. However, any differential treatment is not necessarily discrimination or unconstitutional. The language states ‘must not be treated less favourably’, which means that foreign investment must not be treated less favourably; it does not prohibit a foreign investor from being treated more favourably. However, this clause says that, if more favourable treatment is available to foreign investors, South African investors would also be able to claim that treatment if the SA investor is in like circumstance. Any interpretation of this clause should bear this in mind. Legally, there are two approaches. The first is formal in that all people should be treated equally. However, in a country like South Africa where gaps in opportunity exist, a practical approach to equality is necessary to redress past wrongs. Foreigners have equal protection to South Africans under the Constitution. As for 7(2)(d), this references a situation in which a measure is created exclusively for South African investors. If a foreign investor tries to claim this measure, the investor would not be in like circumstances with the SA investor. Foreigners may be seen in courts as a vulnerable group, and thus this matter would have to be considered case-by-case. The more specific will trump the more general. Government has to follow the Constitution.

The Chairperson observed that these comments did not address Mr Hill-Lewis’s proposed clause.

Mr Hill-Lewis said that he understood the principle, but objected to the wording. He called for the deletion of both 7(2)(d) and 7(4)(g). He thought that, at the least, 7(2)(d) should be re-worded to be far less vague. He found that 7(4)(g) was out of place in that clause and also sent the wrong message to investors.

Mr Williams thought that 7(4)(g) should not be removed, though perhaps moved somewhere else. The argument that investors might be scared away based on laws that may happen is very wishy-washy. Any country can create legislation in the future.

Mr Matiase agreed that the principle should not be removed from the clause in general. He recalled an oversight visit to Limpopo where he saw environmental damage from mining due to mining companies. The Bill should protect the people from companies that destroy the land and the country. He asked the DA to observe instances of open mines left to damage the environment. If anything, this clause should be strengthened.

Mr Macpherson said that the lack of application of mining laws is the government’s problem, not this Committee's. He reminded Mr Williams that businesses want specifics from government; providing these specifics is government’s responsibility. Though government cannot guarantee the future, these matters should not be left open-ended. The Committee heard this opinion loud and clear during the public submissions from Chambers and other businesses.

The Chairperson called on the Committee to study Mr Hill-Lewis’s proposed clause. She urged all members to be willing to consider any and every clause and debate them and take them to the House. This is why members were elected. Whether or not a member has operational experience, that member should still be willing to comment and contribute on behalf of the public. She saw the potential for shifting sub-clause 7(4)(g) to another place in the Bill. She asked the DTI to propose when this matter can be closed.

Mr Hill-Lewis pointed to sub-clauses in Clause 7 that protect environmental efforts. As for Mr Williams’ comments, the government’s ability to legislate away a company’s property or investment is not security in the eyes of a foreign investor.

The Chairperson noted that Mr Hill-Lewis held an opinion, not the Committee’s consensus.

Mr De Gama hoped to deal with matters during this meeting. As for 7(2)(d), the proposal is just to capture factors relating to foreign investment. The aim of the measure has already been captured. Other issues applying to third parties and communities would also be considered. The matter in 7(4)(g) could be moved to Clause 11 Government’s Right to Regulate. If it were deleted, its deletion would not impede the right to regulate. All proposals on standards of treatments have been incorporated through the constitutional references in the Bill. A debate on how these standards benefit the Bill would be beneficial. If the Bill limits standards of treatments to procedural issues rather than substantive issues, the goal of the Bill would be impeded.

Mr October called for the right to regulate to be transparent. He referenced the EU-US trade agreement as upholding a right to regulate. South Africa was perceived as number one in the world for its budgetary process. The DTI gives a cast-iron guarantee to investors that they will not be expropriated. The Bill aims to be explicit about the right to regulate.

Mr Hill-Lewis repeated that he opposes neither national treatment nor the right to regulate. However, even if it is implicit in the Constitution, the Bill should aim to bolster investor confidence through explicit language. The Director General agreed earlier that the Bill should bolster confidence. The first part of the clause he proposes is from South Africa’s proposal to the SADC FIP. He endorsed the pursuit of certainty. He was satisfied that 7(4)(g) be removed and that work would be done on 7(2)(d).

Ms Mlumbi-Peter pointed out that the SADC FIP proposal and Clause 3 in the Bill both reference Section 32 to 34 of the Constitution. She hoped that the Bill could avoid redundancy.

The Chairperson observed that there had not been agreement on Clause Seven.

Clause 8 Security of Investment
The Chairperson observed that there had been a proposal to change the Title of Clause 8 and the Committee did not oppose this Title change.

Clause 9 Protection of Property
The Chairperson moved to consider expropriation versus deprivation. The Committee approved of the Title change of the Clause to ‘Legal Protection of Investment’. The Chairperson observed that this clause would require further study. She noted that the DA is proposing a Clause 10 to further flesh out expropriation issues.

Mr Hill-Lewis admitted that he is not a senior counsellor or lawyer, but that he has studied the FNB Case and the Agri-SA Case. Therefore, his proposed change to this clause may require legal scrubbing for the wording. However, he hoped that the lawyers would preserve the principle in his proposal.

Mr Esterhuizen pointed out the situation in which the government takes custodianship of the land. Regardless of money issues, the investor would still lose the land.

The Chairperson assured Mr Esterhuizen that these matters would be discussed after studying Mr Hill-Lewis’s proposals.

Mr October was comfortable with making constitutional protections explicit. The only issue would be consistency in legal language, thus consistency would need to be applied to these proposals.

Mr De Gama held that these standards of treatments have already been captured. However, this Bill needs to create an optical effect that explicitly reassures investors. Though there is no problem in fleshing out these rights, some of this might end up being a duplication. The issue of legal protection is more difficult. The issue of custodianship has come up in the past but has not yet been regulated; this is why a clause on custodianship was removed. It is also difficult to determine in what scenario deprivation amounts to expropriation; even the courts have advocated for considering this issue on a case-by-case basis. Even with Agri-SA, the courts said that in another very similar case the court might not make the same decision. Therefore, the DTI would have to find some middle ground.

Election of Acting Chairperson
The Chairperson said it was time to elect an Acting Chair. She said that, from the work the Committee has just done while she chaired, the following flags remain: the Application of the Act from Clause 5, Establishment from Clause 6, National Treatment from Clause 7, and legal protection of investment from Clause 9 and the two new proposed clauses from Members. The Committee will be able to continue flagging issues in the Chairperson’s absence. She recused herself from this process and explained that she would be absent from the Committee until 20 October.

On the invitation of the committee secretariat, Mr Williams nominated Mr Kolako; Mr Koornhof seconded Mr Kolako for the position of Acting Chairperson.

Clause 10 Transfer of Funds
Mr October said that the DTI accepted the replacement of ‘transfer’ with ‘repatriation’.

The Chairperson saw no objection from the Committee to this change.

Clause 12 Dispute Resolution
Mr Matiase asked for more clarity on the repatriation of funds. He felt that one sentence was insufficient to cover the matter.

Mr Williams noted that, if legislation comes affecting taxation, it would come through the Portfolio Committee on Finance. Therefore, this Bill cannot address those issues but only aims to reassure investors of the right of repatriation.

Mr Macpherson agreed that the Committee should not waste time on Finance issues.

Mr Matiase pointed out that the purpose of this session is to spend time on issues.

Mr De Gama said that there had been much discussion both within the DTI and with the Committee on this clause. The DTI wanted to provide for the appointment of mediators. The DTI is still working on the necessary guidelines and criteria for this. The DTI has been able to submit language that deals with information required from the investor in order for the DTI to process a request for mediation; the DTI has actually already made a form for this. This form will be given to the Committee. He noted that there has been much debate on 12(5). 

Mr October thought that the new language has accommodated Mr Macpherson’s point that this process should not be up to the discretion of the Minister, but rather should be an automatic right. South Africa upholds the rule of law. Under the rule of law, if an individual has a dispute of any kind, recourse must be pursued through the law. The SADC Protocol encourages domestic remedies, and the EU has taken a firm position against investor-state private arbitration. Any addition of avenues for investor-state resolution would be a terrible step backwards. States view allowing state-state arbitration as a concession; the system has been abused in the past. Investors have insisted on the right to use domestic courts. There is no reason why investors should not have to get permission from their state to pursue cases at the international level. Domestic legislation must be adopted; after all, South Africa has an outstanding judiciary system.

Mr Hill-Lewis agreed that investors must first exhaust domestic remedies, but he called for better definition of the concept of exhaustion. Second, the text distributed by the DTI seems to allow for mediation between investor-state.

Mr October explained that mediation and arbitration are different. The only thing that is out is private arbitration.

Mr Hill-Lewis still felt that the rule of law is not supported when the necessity of arbitration is left to the discretion and efforts of an ambassador or government. He called for time limits to be set up.

Mr N Koornhof (ANC) explained that exhaustion is not so complicated, but that perhaps it should be more explicitly explained. The need for an investor’s state to support the investor is just the way it works. A billion rand investor would surely be supported by his or her state. Maverick cases that are allowed through investor-state arbitration are unacceptable.

Mr Matiase said that there should be not be any guaranteed protections for investors from the state with regards to guaranteed representation for dispute resolution. The state must be able to protect its interests. The Bill of Rights provides for dispute resolution; this balances domestic and foreign investment interests. Foreign investment rules should apply to all countries. International investment paradigms have in the past offered excessive protections to businesses .As a result, BITs and other instruments have resulted in harm to developing countries; a counter-balance is necessary. The Bill must encourage investors to use domestic remedies over any other system.

Mr Alberts noted that this Bill is subject to international law and saying that ‘government may consent’ is in contrast to international law that requires means for international arbitration; he proposed that government must consent to international arbitration, but subject to certain criteria that government could spell out. If an investor meets the criteria, then government must consent to international arbitration as the highest form of appeal. ‘Subject to exhaustion of domestic remedies’ is fine, but international law also says that, if an individual has no prospect of success in a local court or if the system is loaded against that person, he or she does not have to exhaust local remedies. Though this would never be the case in South Africa, for the sake of consistency with international law, the sentence after ‘remedies’ should include ‘in accordance with international law standards’.

Mr Alberts said that he intended to submit a proposed sub-clause 12(6) in writing which would state:  ‘Furthermore, the government must provide protection to local investors outside the Republic as follows: (1) diplomacy in the first instance, (2) mediation where possible, (3) arbitration or adjudication in the International Court of Justice.’ This would let local investors know for certain that the government will support them when they have made investments overseas as much the government protects foreign investors here.

Mr Kalako, Acting Chairperson, confirmed that Mr Alberts was proposing a new addition.

Mr Alberts agreed and repeated that the new sub-clause would protect South African investors who invest outside of the Republic’s borders so that there is an obligation on government to intervene on behalf of local investors when there is no BIT or certainty in the foreign country’s laws. The government would, to the best of its abilities, use international remedies to defend investors from a hypothetical hostile government.

The Acting Chairperson said that the Committee would also consider this proposed clause at a later meeting.

Mr Macpherson noted that the so-called 'spy tapes' case took five years for the courts to process what was seen as a fairly simple, reasonable request. Is this timeline acceptable for businesses? Their cases may well be far more complex and costly. If the process takes too long, it will break the business. This issue may need to be flagged. The Committee needs to consider what timeline is appropriate, what courts will be used, and other issues. He wanted surety on this issue to help the DTI sell investment to foreign companies.

Mr Koornhof joked that perhaps the Committee should change the Bill’s Title back to 'Promotion of'. However, the spy tapes is an extreme example and a dispute would not shut down a business.

Mr October noted that some of these edits come from the EU Chamber, a great example of investors.

Mr Hill-Lewis held that investors cannot be going to every court in the land.

Ms Mlumbi-Peter explained that the international trend is to provide first for mediation. First, the claimant makes a request for arbitration; therefore, it would be ill advised to say that the state ‘must’ consent to international arbitration because it would prevent other means of finding an amicable solution. South Africa has a well-recognised independent judiciary. Here, cases normally take about two years; the international average is four years.

Mr De Gama said that the Bill refers to and recognises international law. The International Law Commission has articles on state responsibility; these articles say that, if an investor is unable to get justice or has no reasonable expectation of relief due, for example, to an impartial system, then the requirement of domestic remedy exhaustion falls away. The investor would have to prove that these articles apply. Investors will not be forced to go through every level of courts; various courts will have jurisdiction in various cases. This Bill does not call on investors to move heaven and earth, but merely to do what is necessary. The state must have discretion on diplomatic protection. However, the decision-making process must be transparent and rational; the process can be reviewed on limited grounds.

Mr Kalako, Acting Chairperson, noted that the DTI’s position was clear but that the issue would be flagged.

Mr Hill-Lewis said that any action by government must be constitutional and that there have been recent examples of the Executive taking decisions that have immediately been struck down by the Constitutional Court. Earlier, Mr De Gama said that the Bill should have an optical effect; Mr Hill-Lewis endorsed that sentiment. However, in essence, an investor has zero guarantee from this clause. If an investor is in dispute with this or any future government, the investor will first have to exhaust domestic remedies, though the meaning of exhaust is unclear and the government will have the power to decide if said investor has exhausted domestic remedies. Second, it is then entirely up to the local South African government’s discretion whether it is prepared to engage in international arbitration. Third, it is entirely up to said investor’s home state as to whether that home state is prepared to engage in international arbitration with South Africa.

Mr Alberts appreciated that an irrational decision by government could be reviewed, but he resented the fact that this would make the legal process longer and more complex. He agreed with the sentiment that this process should be as transparent as possible. As in earlier clauses, the Bill should state on which bases a decision should be made. The government should be obligated to consent to international arbitration or other remedies, subject to certain criteria being met. This would be a mere re-wording of previous Court decisions. Surely an important investor like BMW must be represented in international arbitration. This Bill gives no assurance that future governments will be as rational as the current one. International arbitration is also unclear and could be defined a bit to avoid the government landing in a hostile environment for international arbitration.

Mr October said the Constitution prevents government from acting in an arbitrary manner. Before 1994, expropriation happened all the time; this is no longer the case. Domestic remedies take half the time, as Ms Peter pointed out earlier. If Members want speedy justice, look no further. Every investor has remedies available under the Constitution. In addition to that, the DTI has conceded to international arbitration. This system does not ask for funding from foreign government, but rather consent. The US Chamber of Commerce is a government-funded entity; Chambers of Commerce are easy to approach and garner consent from.

The Chairperson moved to flag this for further debate. He said that the DTI has made its position clear. He asked the legal advisors for their opinion.

Ms Ngema had no further contribution on dispute resolution.

Clause 13 Regulations
Mr Hill-Lewis noted that the changes from yesterday need to be incorporated.

Title of the Bill
Ms Ngema provided feedback that ‘the’ should be removed from the official title of the Bill. It should be ‘Protection of Investment Bill’. The Long Title will also need to be modified. She moved to remove the phrase ‘legislative protection’ from the Long Title. Therefore, the second instance of the word ‘protection’ would also need to be removed.

Mr Kalako, Acting Chairperson, thanked Ms Ngema for this contribution. He announced that the Committee would be back on 13 October but deliberations on the Bill would not occur until 20 October. He hoped that the EFF would be in attendance. The 13 October meeting would be a briefing from the National Credit Regulator, the National Regulator Compulsory Specifications (NCRS), and National Consumer Commission (NCC) on their annual reports.

The meeting was adjourned.