Imagining South Africa’s Foreign Investment Regulatory Regime in a Global Context

The document examines the tension between South Africa's constitutional mandate to redress apartheid-induced inequalities through black economic empowerment (BEE) and its commitments under first-generation bilateral investment treaties (BITs). It analyzes the South African government's decision to terminate these treaties in favor of the Promotion and Protection of Investment Bill (PPIB), noting that this unilateral approach creates reputational risks and potential legal inconsistencies with customary international law. By comparing South Africa's experience with India and Indonesia, the author argues that emerging economies can successfully carve out policy space within the international framework rather than abandoning it. The paper concludes that South Africa should leverage its unique history to influence the development of third-generation investment agreements while maintaining the signaling power and investor certainty provided by international regimes.

• South Africa entered into a series of bilateral investment treaties (BITs) between 1994 and 1998, primarily with European capital-exporting countries, to signal its re-engagement with the international community and protect foreign investments.
• The South African government found that its BITs created a 'regulatory chill' or capture, hindering its ability to implement constitutional mandates and developmental policies, specifically the black economic empowerment (BEE) programme.
• The decision to terminate BITs and replace them with the Promotion and Protection of Investment Bill (PPIB) is viewed as a 'lone ranger' approach that may cause reputational damage and anxiety among foreign investors.
• The South African Constitutional Court's ruling in the AgriSA case creates a distinction between 'deprivation' and 'expropriation' that contradicts customary international investment law, which generally views any state action diminishing property value as expropriation.
• The Promotion and Protection of Investment Bill (PPIB) deviates from customary international law by omitting the 'fair and equitable treatment' principle and failing to provide an investorstate dispute settlement (ISDS) mechanism.
• Other domestic legislation, such as the Private Security Industry Regulation Amendment Bill No. 27 of 2012 and the MPRDA Amendment Bill, may be seen as facilitating expropriation or imposing performance requirements that would have been prohibited under BITs.
• India and Indonesia provide alternative models for emerging economies; India is reviewing and renegotiating its BITs to reserve policy space, while Indonesia has used 'localised globalism' to weave international norms into domestic law while maintaining an ISDS 'fork in the road' provision.

APA

Langalanga, A. (2015). Imagining South Africa’s Foreign Investment Regulatory Regime in a Global Context. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2015/04/Occasional-Paper-214.pdf

Chicago

Langalanga, Azwimpheleli. Imagining South Africa’s Foreign Investment Regulatory Regime in a Global Context. South African Institute of International Affairs, 2015. https://saiia.org.za/wp-content/uploads/2015/04/Occasional-Paper-214.pdf.

Wikipedia

{{cite report |last1=Langalanga |first1=Azwimpheleli |title=Imagining South Africa’s Foreign Investment Regulatory Regime in a Global Context |publisher=South African Institute of International Affairs |date=May 2015 |url=https://saiia.org.za/wp-content/uploads/2015/04/Occasional-Paper-214.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{langalanga2015imagining, author = {Langalanga, Azwimpheleli}, title = {{Imagining South Africa’s Foreign Investment Regulatory Regime in a Global Context}}, institution = {South African Institute of International Affairs}, year = {2015}, month = may, url = {https://saiia.org.za/wp-content/uploads/2015/04/Occasional-Paper-214.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }