Litigation is the resolution of a dispute before a court of law. The court may be that of a host state, a sub-regional court such as the SADC Tribunal, a continental court such as the ACH&PR,543 or an international tribunal such as the ICJ.544 In the absence of consent to arbitration by a host state, local litigation is the default forum for the resolution of investor-state disputes.545
According to UNCTAD, there are five benefits to the use of the courts of host states.546 Firstly, such use puts foreign investors on equal footing with domestic investors, as well
541 Tietje and Baetens “The Impact of Investor-State-Dispute Settlement (ISDS) in the
Transatlantic Trade and Investment Partnership” at para 74-85
http://media.leidenuniv.nl/legacy/the-impact-of-investor-state-dispute-settlement-isds-in- the-ttip.pdf (Date of use: 17 April 2018).
542 Tietje and Baetens “The Impact of Investor-State-Dispute Settlement (ISDS) in the
Transatlantic Trade and Investment Partnership” at para 86
http://media.leidenuniv.nl/legacy/the-impact-of-investor-state-dispute-settlement-isds-in- the-ttip.pdf (Date of use: 17 April 2018).
543 See http://www.african-court.org/en/ (Date of use: 18 January 2018). 544 See http://www.icj-cij.org/homepage/ (Date of use: 13 October 2015).
545 See for example Salacuse 2007 (31) Fordham International Law Journal 138 at 154 at
163.
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as with other foreign investors from States that do not have BITs or TIPs with a host state.547 Secondly, this helps to establish a level playing field among foreign investors.548 Thirdly, local courts are well suited to applying and interpreting domestic laws.549 Fourthly, ISDS is less critical in countries with well-developed and efficient legal systems.550 Finally, the use of local courts enables and brings to the fore the development of legal and judicial institutions of a host state.551
However, local litigation also has its downside. Firstly, there is a possibility that a host state may not guarantee an efficient and independent judicial system, or that local courts
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
547 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
548 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
549 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
550 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
551 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
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may lack independence, or be subject to political control.552 Secondly, local litigation may take long to conclude (e.g. due to high caseloads), thereby resulting in costly litigation.553 Thirdly, local courts may be subject to political interference.554 Fourth, they may be biased towards foreigners.555 Fifth, they may lack the expertise to deal with complex international law principles applicable to investment transactions.556 Sixth, local courts may suffer from backlogs and inefficient procedures.557 However, local courts may, depending on the state of their rule of law, be an attractive forum for the adjudication of investor-state disputes.558 Furthermore, the extent of these challenges will differ from one host state to another.559 Therefore the above challenges are not global, and will vary from state to state. On the other hand, the challenges of ISDS are global in nature. Recommendations regarding their future use of litigation are made in Chapter 6.560
552 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
553 United Nations Conference on Trade and Development “International
Investment Agreements Issues Note”, Issue 4 at 11
http://investmentpolicyhub.unctad.org/Upload/Documents/IMPROVING%20INVESTMEN T%20DISPUTE%20SETTLEMENT-%20UNCTAD%20POLICY%20TOOLS.pdf (Date of use: 10 April 2018).
554 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 555 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 556 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 557 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 558 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 559 Salacuse 2007 (31) Fordham International Law Journal 138 at 163. 560 See Recommendations 6.2.2 and 6.2.3 in Chapter 6.
105 2.5.5 Conclusion
All the mechanisms for the resolution of investor-state disputes discussed above are important. Host states will always have different policies on foreign investment, and their socio-economic positions will always vary as well. Therefore, a one-size-fits-all approach towards the choice dispute resolution mechanism is not ideal. The failure of the PAIC in providing a single mechanism for African states is testament to these differences. SADC’s options with regard to the resolution of investor-state disputes are analysed in Chapter 5.