Bilateral Investment Treaties, Mining and National Champions: Making it work

This briefing paper examines the policy tools available to Eastern African states to foster 'national champions' in the mining sector and maximize sustainable development benefits from foreign direct investment. It analyzes the effectiveness of ownership and performance requirements and evaluates how international investment agreements, specifically Bilateral Investment Treaties (BITs), may restrict the policy space of host governments.

• The 'Africa Mining Vision' (2009) represents a shift from 1980s liberalization toward a paradigm emphasizing equity, transparency, and a more significant role for the state to ensure mineral wealth supports broad-based sustainable growth.
• Ownership-related tools to foster national champions include free carry obligations (granting the government a free percentage interest), joint venture requirements (mandating local partners), the promotion of state-owned enterprises (SOEs), and the expropriation of private firms.
• Performance requirements—such as local content mandates, labor training, and R&D obligations—can successfully pursue development objectives if well-crafted and integrated into a broader strategy, though they are often weak when used in isolation.
• International investment treaties often contain substantive provisions—such as national treatment, most-favored-nation (MFN) treatment, and fair and equitable treatment (FET)—that can limit a state's ability to implement discriminatory or retroactive development policies.
• Investor-State Dispute Settlement (ISDS) allows investors to bypass domestic courts and seek international arbitration for damages, which can lead to 'regulatory chill' where governments avoid public policy measures to prevent costly claims.
• Pre-establishment rights (market access) in newer treaties can prevent states from imposing joint venture requirements or free carry shares before an investment is made; however, most older treaties in the region do not include these rights.
• Post-establishment changes to ownership or the imposition of new performance requirements are legally riskier and more likely to be classified as expropriation, necessitating compensation to the investor.
• There is a conflict between development practice and investment law regarding performance requirements; while tools like downstream processing are beneficial (e.g., in Botswana), they often breach WTO TRIMs or BIT prohibitions.
• To preserve policy space, states can avoid including market access rights, use 'positive lists' for sectors, include specific exclusions for extractive industries, or remove performance requirement disputes from the scope of ISDS.

APA

Cosbey, A., Mann, H., & Cunningham, M. (2014). Bilateral Investment Treaties, Mining and National Champions: Making it work. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/bilateral_investment_treaties_mining_national_uneca.pdf

Chicago

Cosbey, Aaron, Howard Mann, and Maxine Cunningham. Bilateral Investment Treaties, Mining and National Champions: Making it work. International Institute for Sustainable Development, 2014. https://www.iisd.org/system/files/publications/bilateral_investment_treaties_mining_national_uneca.pdf.

Wikipedia

{{cite report |last1=Cosbey |first1=Aaron |last2=Mann |first2=Howard |last3=Cunningham |first3=Maxine |title=Bilateral Investment Treaties, Mining and National Champions: Making it work |publisher=International Institute for Sustainable Development |date=June 2014 |url=https://www.iisd.org/system/files/publications/bilateral_investment_treaties_mining_national_uneca.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cosbey2014bilateral, author = {Cosbey, Aaron and Mann, Howard and Cunningham, Maxine}, title = {{Bilateral Investment Treaties, Mining and National Champions: Making it work}}, institution = {International Institute for Sustainable Development}, year = {2014}, month = jun, url = {https://www.iisd.org/system/files/publications/bilateral_investment_treaties_mining_national_uneca.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }