Back to the Future: Diplomatic Protection in South Africa’s FDI Protection Regime

The author critiques South Africa's move to replace international investor-state dispute settlement (ISDS) with state-to-state arbitration via the Promotion and Protection of Investment Bill (PPIB). While noting the failures of state-to-state arbitration—citing a dispute where Zimbabwe ignored a SADC tribunal ruling regarding South African investors—the author argues that removing ISDS deprives South African courts of the chance to learn from international best practices. The paper suggests that South Africa's robust legal system could handle most disputes locally, especially if specialised investment courts were established, and points to Indonesia's 'globalised localism' as a model for linking international law with domestic legislation.

• South Africa intends to use the Promotion and Protection of Investment Bill (PPIB) to replace international investor-state arbitration with state-to-state dispute settlement, moving away from the models used in bilateral investment treaties signed in the 1990s.
• State-to-state arbitration can be unreliable for foreign investors, as demonstrated by a case where the Zimbabwean government ignored a Southern African Development Community tribunal ruling on expropriatory action against South African investors and withdrew from its jurisdiction.
• Removing investment-state dispute settlement (ISDS) is viewed as a lost opportunity for the South African judiciary to localise global international investment regulatory norms and learn from international best practice.
• To encourage the use of local courts and address issues like court backlogs, South Africa should consider creating specialised investment courts, similar to its existing labour, tax, and land courts.
• Indonesia provides a potential model called 'globalised localism', which links international investment law to domestic legislation by offering an investment-state dispute settlement system as an alternative to local courts.

APA

South African Institute of International Affairs (2015). Back to the Future: Diplomatic Protection in South Africa’s FDI Protection Regime. https://saiia.org.za/research/back-to-the-future-diplomatic-protection-in-south-africas-fdi-protection-regime/

Chicago

South African Institute of International Affairs. Back to the Future: Diplomatic Protection in South Africa’s FDI Protection Regime. 2015. https://saiia.org.za/research/back-to-the-future-diplomatic-protection-in-south-africas-fdi-protection-regime/.

Wikipedia

{{cite report |author=South African Institute of International Affairs |title=Back to the Future: Diplomatic Protection in South Africa’s FDI Protection Regime |date=6 October 2015 |url=https://saiia.org.za/research/back-to-the-future-diplomatic-protection-in-south-africas-fdi-protection-regime/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{southafricaninstituteofinternationalaffairs2015back, author = {{South African Institute of International Affairs}}, title = {{Back to the Future: Diplomatic Protection in South Africa’s FDI Protection Regime}}, institution = {South African Institute of International Affairs}, year = {2015}, month = oct, url = {https://saiia.org.za/research/back-to-the-future-diplomatic-protection-in-south-africas-fdi-protection-regime/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }