Is investment mediation the future of investor-state dispute settlement (ISDS) in Africa?

Abstract

International investment disputes have traditionally been resolved through Investor- State Dispute Settlement (ISDS) as administered by the International Centre for Settlement of Investment Disputes(ICSID). Prior to the current discontentment on settlement of investment disputes, foreign investors were more inclined to ISDS than domestic courts. The system of ISDS offered a neutral forum for an investor to sue and claim compensation for breach of an investment- related obligation by the Host State, without immunity obstacles. However, ISDS has faced growing criticism including, perceived biasness, lack of transparency, exorbitant costs and lengthy duration spent on arbitration proceedings, unpredictability of awards and erroneous decisions, among others. In Africa, there is dissatisfaction regarding under-representation of African ADR experts, regulatory chill, and costly awards that cripple African economies. The UNCITRAL Working Group III is alive to the criticism around ISDS, and has submitted options of reform to improve the system of settling investment disputes. This research examines one of the reforms; promoting ADR methods. It seeks to assess the feasibility of investment mediation, an ADR method, as a possible alternative to ISDS. The research evaluates the advantages of mediation pointing out that it is a confidential process that offers a neutral ground for the disputing parties to negotiate and settle amicably, thus preserving their relationship. Additionally, mediation is time and cost- effective and grants all States, investors and SMEs, access to ISDS. Most importantly, the research situates mediation within ‘cooling-off’ periods stipulated in International Investment Agreements and investment regulations. The findings of the study seeks to provide valuable insights into how investment mediation can be effectively utilized as a possible alternative to ISDS.