African Investment Agreement Reform and Its Contribution to Sustainable Foreign Investment

Abstract

The African Union Agenda 2063 prominently supports that foreign investment and sustainable development are closely linked allies that mutually reinforce each other. International investment law, however, is frequently perceived to impede rather than encourage sustainable foreign investment. Opponents argue that traditional International Investment Agreements (IIAs) prompt a “regulatory chill effect” that prevents host states from adopting environmental, labor, or social policies as they oblige host states to compensate foreign investors for losses caused by such sustainability policies. African states have initiated comprehensive IIA reforms to address this concern, the most prominent result being the Draft Pan-African Investment Code 2017. This article discusses the challenges of traditional African IIAs and the African reform approaches to address the negative effects of traditional IIAs on sustainable development. After an overview of the African IIA landscape and its effects on the regulation of foreign investment, it explores the main substantive IIA provisions affecting the host states’ regulatory sovereignty to implement sustainable development policies and analyzes African approaches to refine traditional IIA provisions—some of which provide novel methods so far largely overlooked in the global IIA debate.