Administrative and Judicial Treatment: An Analysis of the AfCFTA Protocol on Investment

Abstract

Investment Agreements are increasingly used as economic integration tools for attracting foreign direct investment to scale up production, develop value chains, increase trade, and achieve development. The AfCFTA Protocol on Investment creates a framework for investment cooperation and facilitation and investment disputes prevention. It aims to attract strategic investments needed by State Parties to pursue sustainable development while simultaneously yielding returns on investments. In the old generation agreements, they granted investors direct access to international dispute settlement. Adjudicating investor-state disputes led to concerns about infringement on state sovereignty and rights to regulate. Backlash against the international investment regime led to change in approach to IIAs by some parties to address such concerns. This is evident in the AfCFTA Protocol on Investment. Key changes in this endeavour are the investment protection provisions. Of particular interest to this paper is the exclusion of Fair and Equitable Treatment Standard of investment protection, whose reputation and appeal as an investor-friendly principle lies in its indeterminacy, coverage of wide range of governmental actions, flexibility, and potential for wide interpretation in claims other than lawful expropriation. it was replaced by the provision on administrative and judicial treatment. Interestingly, Article 17(1) benchmarks this breach to the minimum standard of treatment under customary international law. This demonstrates efforts to preserve regulatory space and accommodate environmental and developmental exigencies. Given the well-established nexus between investment and development, and the role that strategically attracting foreign direct investment can play in attaining developmental goals, this paper analysis the implication of Article 17 on the continents’ ability to attract foreign direct investment. The paper observes that weak legal and regulatory environments could impact investment and lead to arbitration where Article 17 will be subjected to rigorous interrogation with consequences. Using doctrinal research, this paper analysis the implication of Article 17 to distil its possible implication on the continent’s ability to attract foreign direct investment to fund sustainable development while highlighting potential pitfalls and recommending ways forward.