Building a Robust Investor-State Dispute Settlement System in Africa: The Imperative of a

Pan-African Investment Court

Miracle Okumu Mudeyi

Abstract

This paper seeks to propose a transformative approach to address the issues that have plagued
Africa's Investor-State Dispute Settlement (ISDS) mechanism through the establishment of a
Pan-African Investment Court (PAIC). The primary motivation for this proposal is the broad-
based criticisms of the legitimacy of the Arbitration mechanism by various stakeholders within
international investment law. These criticisms are primarily anchored on the perception that the
ISDS mechanism is plagued by legitimacy crises, with a dissatisfactory notion that denounces
the deployment of private mechanisms and the privity of contract-ingrained investment
arbitration framework to resolve publicly-inclined investor-state disputes. By proposing the
establishment of a PAIC, this article aims to advance the discourse towards building a more
credible and legitimate ISDS mechanism that reflects the values of the African people and the
broader global community. In making these arguments this paper will rely on the regime bias
model in investor-state arbitration from a Third World Approaches to International
Law(TWAIL) perspective. Regime bias from a Third World perspective means that international
trade rules favour developed countries over Third World nations. This results in unfair outcomes
due to the power imbalance between them.

Keywords: Reform, TWAIL, Regime Bias, Investor-State Arbitration, Developed Countries

1.0 Introduction: Background and Significance of Africa's Investor-State Dispute
Settlement (ISDS) Mechanism

A comprehensive and authentic transformation of international investment law from an African

perspective requires more than just the inclusion of African experts or the adjustment of
investment regulations to align with African interests. It demands a thorough re-evaluation of the
very mechanisms utilized for resolving disputes, as these mechanisms possess the potential to
undermine the comprehensive reform agenda. Accomplishing this undertaking entails a critical
examination of existing frameworks and procedures for addressing investment disputes, with the
aim of identifying their deficiencies and limitations. The objective is to devise innovative and
more effective approaches to address conflicts arising from investments. This tactic demands the
active participation of different stakeholders, like legal adepts, policymakers, investors, and
charitable organizations. The collective involvement of these stakeholders guarantees that the
overhaul process is comprehensive, clear, and engaging. Collaboratively working towards a
shared vision of a more equitable and just system of investment governance, these stakeholders
can shape the success of an authentically African transformation of investment law. Together,
they may cultivate a background in which the interests and viewpoints of African nations are
authentically portrayed, the voices of all affected parties are heard, and the principles of
impartiality and integrity guide the resolution of investment-related disputes.

1.1 Criticisms of the ISDS mechanism and the need for a transformative approach

In recent years, there has been a mounting wave of criticisms targeting the Investor-State Dispute
Settlement (ISDS) mechanism, particularly within the African context. 1 These criticisms have
centred around the fundamental issues of legitimacy, fairness, and transparency. Stakeholders
have voiced growing concerns regarding the perceived imbalances, lack of accountability, and

1 Kariuki Muigua, ‘Africa’s Role in the Reform of International Investment Law and the Investor-State Dispute
Settlement (ISDS) System’ (Social Science Research Network 24 October 2020)
<https://ssrn.com/abstract=3833305> accessed 18 May 2023.
inadequate representation within the existing ISDS framework. 2 Recognizing the pressing need
for an alternative and more effective approach to resolving investor-state disputes, this
subsection advocates for the exploration of better mechanisms that can adequately address these
criticisms while promoting a fair and equitable resolution process.

The current form of Bilateral Investment Treaties (BITs) grants extensive protection mechanisms
to investors. However, these mechanisms are perceived as one-sided since only investors can
initiate claims against States, with rare exceptions for counterclaims. Moreover, based on
available data, investors have enjoyed a significant advantage in the proceedings. In the context
of the ISDS regime, approximately two-thirds of cases have either been settled or lost by States.
Surprisingly, despite initial expectations, the inclusion of ISDS provisions in BITs has not
resulted in a substantial increase in foreign direct investment (FDI). Consequently, some analysts
have raised doubts regarding the actual impact of ISDS provisions on investors' decisions to
establish a presence in a particular State. 3 In the African context as Nyanje puts it, without
question, the confidence in Investor-State Dispute Settlement has reached its lowest point ever
since its establishment.4 Furthermore, the lack of clarity regarding the decision-making of
foreign courts in handling delicate disputes involving sovereign nations, such as Nigeria's
prominent case against the P&ID5 arbitration award, highlights deeper concerns regarding
African countries' reliance on foreign courts and arbitration panels as venues for resolving
conflicts with foreign investors. And as such, is an urgent necessity to enhance the capabilities of
arbitration centres throughout Africa, ensuring they can serve as effective platforms for resolving
arbitration disputes.6

The original intent of ISDS provisions was to establish a fair, impartial, and effective forum for
resolving investment disputes, aiming to overcome the limitations of domestic litigation or

2 Lawson Ondieki, ‘Evaluating the Legitimacy of the Investor-State Dispute Settlement Mechanism for the AfCFTA’
(2022) 7 Strathmore Law Review 101.
3 Kaj Hobér, ‘Does Investment Arbitration have a Future?’ in in Marc Bungenberg et al (eds) International
Investment Law (C.H.BECK 2015) 1873, 1874.
4 John Nyanje, ‘Hegemony in Investor State Dispute Settlement: How African States Need to Approach Reforms’
(Afronomicslaw.org7 September 2020) <https://www.afronomicslaw.org/2020/09/07/hegemony-in-investor-state-
dispute-settlement-how-african-states-need-to-approach-reforms> accessed 14 May 2023.
5 [2019] EWHC 2541
6 John Nyanje, ‘MATCH FIXING’ in INVESTOR STATE ARBITRATION: PROCESS & INDUSTRIAL DEVELOPMENTS
LIMITED v FEDERAL REPUBLIC of NIGERIA: John S Nyanje’ (2023) 2 African Journal of Commercial Law 221
<https://journals.kabarak.ac.ke/index.php/ajcl/article/view/276> accessed 14 May 2023.
 7
diplomatic protection. However, ISDS itself is not immune to shortcomings. In recent years,
there has been growing opposition and criticism towards ISDS, leading to calls for its reform. 8
Some States have even started excluding ISDS from newly concluded investment treaties, raising
doubts about its overall effectiveness.9 The criticisms primarily arise from the way ISDS
obscures valid government regulations and the tendency of arbitral tribunals to interpret
substantive rights in a manner that heavily favours foreign investors, often displaying an
adventurous approach.10

From an Afrocentric approach, Mbengue has expressed serious and justifiable worries about the
apparent and alarming absence of diversity in the selection of arbitrators, specifically drawing
attention to the blatant lack of African representation in international tribunals such as the
illustrious International Centre for Settlement of Investment Disputes (ICSID). 11 These critics
cogently argue that the grossly disproportionate underrepresentation of highly qualified African
scholars and experts in the ISDS system suggests a systemic and deliberate effort to circumvent
and undermine diversity initiatives. The dearth of African arbitrators at the ICSID is a serious
impediment to the overarching objective of fostering and promoting African-based jurisprudence
in ISDS arbitration, which is unequivocally viewed as an undesirable outcome. The harmful
outcomes of this absence of African perspectives cannot be exaggerated and may have extensive
implications on the standard, neutrality, and justness of results produced in investment disputes,
thereby casting a prolonged shadow on the legality and reliability of the entire ISDS mechanism.

The inadequate and insufficient involvement of African individuals and entities in the realm of
investment arbitration lends credence to the proposition that an alternative approach to dispute
resolution may be warranted. This alternative approach, which may assume the form of a Pan-
African Investment Court, would prioritize the presence and contribution of African

7 Stephan W Schill, ‘Reforming Investor–State Dispute Settlement: A (Comparative and International)

Constitutional Law Framework’ (2017) 20 (3) Journal of International Economic Law 649, 650.
8 Reforming Investment Dispute Settlement: A Stocktaking, IIA Issue Notes (n 13).
9 Global Affairs Canada, ‘Canada-United States-Mexico Agreement (CUSMA) – Chapter 14 – Investment’ (GAC29
July 2020) <https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/
cusma-aceum/text-texte/14.aspx?lang=eng> accessed 31 May 2023.
10 Harm Schepel, ‘M. Sornarajah. Resistance and Change in the International Law on Foreign Investment’ (2015)
26 European Journal of International Law 1050.
11 Makane Moïse Mbengue and Stefanie Schacherer, ‘The “Africanization” of International Investment Law: The
Pan-African Investment Code and the Reform of the International Investment Regime’ [2017] The Journal of World
Investment & Trade 414.
professionals, experts, and stakeholders in resolving investment disputes that originate and are
anchored in the African continent. The uniqueness of Africa's cultural, economic, and political
realities would be reflected in such an arrangement, which would enhance the legitimacy,
fairness, and efficacy of the arbitration process.

1.2 Objective of the paper: Rooting for the Establishment of a Pan-African

Investment Court (PAIC)

This paper will set out to address the pressing legitimacy concerns surrounding Africa's Investor-
State Dispute Settlement (ISDS) mechanism by proposing a transformative solution: the
establishment of a Pan-African Investment Court (PAIC). With the objective of offering a more
credible and legitimate avenue for resolving investor-state disputes, the article aims to present a
compelling case for the PAIC by marshalling robust arguments and evidence. Central to this
proposal is a deep consideration of the values held by the African people and the broader global
community, ensuring that the PAIC reflects their aspirations for fairness, equity, and justice in
the realm of international investment law. By examining the deficiencies of the current ISDS
mechanism and advocating for the PAIC, this article seeks to contribute to the ongoing discourse
on shaping a more effective and responsive system for resolving investor-state disputes in Africa
and beyond.

2.0 . Legitimacy Crises in the ISDS Mechanism

2.1 Perceptions of legitimacy issues

There has been a contention regarding the system's manifestation of bias towards investors
through the provision of extensive rights while neglecting to sufficiently consider the rights of
host States, particularly with regard to government regulation for the betterment of the public.
The issue at hand encompasses two critical aspects; the first is the obstructive impact of ISDS on
government regulation, whereas the second concerns the venturesome inclinations of arbitral
tribunals in interpreting substantive rights in favour of foreign investors.12

12 Global Affairs Canada, ‘Canada-United States-Mexico Agreement (CUSMA) – Chapter 14 – Investment’ (GAC29
July 2020) <https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/
cusma-aceum/text-texte/14.aspx?lang=eng> accessed 31 May 2023.
The potential impact of Investor-State Dispute Settlement (ISDS) mechanisms on government
regulation has raised concerns, stemming from the extensive obligations that states have under
investment agreements. As a result, any government regulation that is aimed at protecting the
public interest and affecting investments, whether directly or indirectly, may be subject to
investment arbitration.13 This trend is evident in the majority of cases brought before arbitral
tribunals, which often revolve around government regulations. 14 Moreover, tribunals tend to
prioritize the impact of regulation on an investor rather than considering the regulation or
government measure's overall purpose. This approach directly affects states' ability to regulate in
the public interest and may lead to a chilling effect where states refrain from, or inadequately
regulate, matters concerning public welfare, such as health, safety, and environmental
standards.15 Additionally, arbitral tribunals have faced criticism for their innovative and broad
interpretations of substantive rights, which primarily benefit foreign investors. This further limits
a host state's ability to exercise its regulatory function in the public interest.

The realm of ISDS has been fraught with unpredictability and a conspicuous lack of coherence in
the decisions that emanate from its domain. The cornerstone of any legal system is consistency
and coherence in decisions, which unfortunately is not being upheld in this particular system. 16
Arbitral tribunals are increasingly rendering decisions that are conflicting in nature on cases that
involve identical issues or even stem from the same International Investment Agreements. 17 Such
inconsistency in decisions, particularly concerning public issues that have significant financial
and political implications, is an egregious blow to the ISDS regime. In light of this, the Pan
African Investment Court may present a promising avenue to remedy the system of the criticisms
that have been levelled against it, particularly the issues of inconsistency and unpredictability.

In the same vein, the United Nations Conference on Trade and Development (UNCTAD) has
identified various shortcomings within the ISDS system, leading to concerns and crises

13 Ibid
14 Lisa Diependaele, Ferdi De Ville and Sigrid Sterckx, ‘Assessing the Normative Legitimacy of Investment
Arbitration: The EU’s Investment Court System’ (2019) 24 New Political Economy 37
<https://ideas.repec.org/a/taf/cnpexx/v24y2019i1p37-61.html> accessed 14 May 2023.
15 Ibid
16 Howard Mann and others, ‘Comments on ICSID Discussion Paper, “Possible Improvements of the Framework
for ICSID Arbitration”’ (Canadacommons.ca15 December 2004)
<https://canadacommons.ca/artifacts/615846/comments-on-icsid-discussion-paper-possible-improvements-of-
the-framework-for-icsid-arbitration/1596418/> accessed 14 May 2023.
17 Jorun Baumgartner, Treaty Shopping in International Investment Law (Oxford University Press 2016).
surrounding it. UNCTAD recognizes that the concerns and crises surrounding ISDS arise from
various deficiencies within the system. The ISDS mechanism's shortcomings include arbitration
tribunals' expansive or contradictory interpretation of crucial provisions in IIAs, inadequate
enforcement and annulment procedures, and concerns regarding the qualifications of arbitrators.
Furthermore, a broader public discourse questioning the usefulness and legitimacy of the ISDS
mechanism has further contributed to these concerns.18

The ISDS system has faced some challenges, which UNCTAD has acknowledged, and therefore
recognized the need to implement reforms to deal with the increasing number of ISDS cases and
to improve the transparency and legitimacy of ISDS proceedings. The proposed reforms aim to
address the issue of inconsistent interpretations of key provisions in IIAs and improve the
interpretation of treaties, enhance the impartiality and quality of arbitrators, decrease the duration
and expenses of proceedings, provide support to developing countries in managing ISDS cases,
and resolve overall concerns about the functioning of the ISDS system. It is imperative to
implement these actions to ensure that the ISDS mechanism stays a lawful and useful means of
resolving investment disputes.

2.2 Criticisms of private mechanisms and the privity of contract-ingrained

investment arbitration framework

The ISDS framework has faced several criticisms, including criticisms of private mechanisms
and the privity of contracts.19 Private mechanisms in investment arbitration have been criticized
for undermining the public interest, as they are not accountable to the public and are not
transparent. Private mechanisms have also been criticized for being biased towards investors, as
investors have more resources to invest in the arbitration process and can choose arbitrators who
are more favourable to their interests.20 The privity of contracts ingrained in the investment
arbitration framework is another criticism. The privity of a contract means that only the parties to
the contract can enforce it, which can lead to a lack of accountability. This limits the ability of
third parties to participate in the arbitration process which can lead to decisions that do not take

18 Transnational Institute, ‘In Numbers IMPACTS of INVESTMENT ARBITRATION against AFRICAN STATES’ (2019)
<https://www.tni.org/files/publication-downloads/isds_africa_web.pdf> accessed 11 May 2023.
19 Giovanni Zarra, ‘The Issue of Incoherence in Investment Arbitration: Is There Need for a Systemic Reform?’
(2018) 17 Chinese Journal of International Law 137.
20 Jeswald W. Salacuse, The Law of Investment Treaties (Oxford University Press 2015) 175-176.
into account the interests of third parties. Additionally, the privity of contracts can limit the
ability of states to regulate in the public interest, as investment treaties often contain provisions
that allow investors to sue states for damages if their investments are affected by regulatory
measures.21 To address these criticisms, there have been calls for reforms in the investment
arbitration system. Reforms may include greater transparency, more accountability to the public,
and greater participation by third parties. Additionally, investment treaties may need to be re-
negotiated to ensure that states can regulate in the public interest without fear of being sued by
investors.22 In conclusion, transparency should be a mandatory requirement in investor-state
claims within public international law. Investment treaty arbitration, despite its commercial law
origins, is fundamentally public due to state involvement and complex public interest and policy
issues. Transparency upholds principles of justice, accountability, and legitimacy, fostering
public confidence and promoting the rule of law. It allows meaningful public scrutiny, empowers
civil society, and ensures broader participation in decisions impacting communities. By
embracing transparency, we create a fair and equitable investment dispute settlement system that
serves the public interest, aligns with international legal trends, and contributes to a just and
prosperous global community.

3.0 The Role of a Pan-African Investment Court (PAIC)

3.1 Rationale behind establishing a PAIC

In this section, I present the rationale for proposing a Pan-African Investment Court. It discusses
how a PAIC can address the identified legitimacy concerns, offering an independent and
impartial forum for resolving investment disputes in Africa. The ICSID arbitration system, a
mechanism that has been established to resolve investor-state disputes, has been subject to
criticism that it is imbalanced against host governments and favours foreign investors in its
awards. The legitimacy of international investor-state arbitration and its capability to address the
interests of both foreign investors and host states is being increasingly questioned by host
nations. It is noteworthy that low-income countries hailing from Africa and other regions

21 Rudolf Dolzer and Christoph Schreuer, Principles of International Investment Law (Oxford University Press
2012) 98-99.
22 Gus Van Harten, Investment Treaty Arbitration and Public Law (Oxford University Press 2010) 209.
frequently lack the resources to defend themselves against multinational corporations, thereby
exacerbating the issue.23

Moreover, an inherent weakness of the investor-state dispute settlement system is the lack of an
appellate mechanism to review arbitral decisions that may have committed errors in their awards.
The nonexistence of such a mechanism has sparked worries about the coherence of arbitrational
judgments and their possible influence on the impartiality of conclusions. It has been contended
that an appellate mechanism can ensure coherence in arbitral verdicts and boost the legitimacy of
the investor-state dispute settlement structure.24

Furthermore, it is imperative to highlight that the implementation of an investment court

mechanism holds the potential to establish a higher level of consistency and foreseeability in the
resolution of conflicts between investors and nations. 25 The utilization of established principles
that are frequently employed in conventional legal systems, including but not limited to the
doctrine of precedent, can accomplish this. Also, the infusion of transparency into the conflict
resolution process can advance the efficiency and impartiality of the investment court system.

The justification behind the establishment of a Pan-African Investment Court is rooted in the
legitimacy predicaments and purported insufficiencies of international investment arbitration in
Africa. In light of the ongoing global discussion on the reformation of ISDS, a permanent
investment court has emerged as one of the two major approaches. 26 On one hand, there is the
recommendation to maintain the current international investment arbitration framework, while
simultaneously reforming it to address its legitimacy crises. On the contrary, it can be contended
that the notion of a modification of the existing international investment arbitration into a more
refined investment court system warrants examination and consideration. The impetus for the
creation of this Court is particularly timely given that several African states have been

23 Elsa Sardinha, ‘The Impetus for the Creation of an Appellate Mechanism’ (2017) 32 ICSID Review - Foreign
Investment Law Journal 503 <https://academic.oup.com/icsidreview/article/32/3/503/4718101?
login=true#104793333> accessed 6 April 2023.
24 Sachet Singh and Sooraj Sharma, ‘Investor-State Dispute Settlement Mechanism: The Quest for a Workable
Roadmap’ (2013) 29 Utrecht Journal of International and European Law 88.
25 sam@soboldltd.com, ‘International Bar Association Arbitration Committee Report on Investor-State Dispute
Resolution Reform’ (Three Crowns11 December 2018) <https://www.threecrownsllp.com/international-bar-
association-arbitration-committee-report-on-investor-state-dispute-resolution-reform/> accessed 14 May 2023.
26 See Umair Ghori, 'Investment Court System Or Regional Dispute Settlement: the Uncertain Future of Investor-
state Dispute Settlement' (2018) Bond L. Rev., 30, 83
confronted with exorbitant arbitral demands from investors. 27 Thus, the investment court system
has garnered support from various commentators, including Subedi and Butler, who contend that
a continental dispute resolution mechanism has the potential to redress the investor-state dispute
settlement imbalance between investors and states.28

Establishing an investment court which is globally acknowledged as an institutional court, has

the potential to accelerate and simplify procedures due to its efficient organizational structure. 29
In addition, the implementation of such measures can prove to be pivotal in promoting the
growth and development of African States' position as 'investment rule-makers rather than being
relegated to the passive position of 'rule-takers'. In light of concerns surrounding the adequacy of
conventional Investor-State Dispute Settlement (ISDS) mechanisms, I advocate for the adoption
of a court system as a viable alternative. 30 The core argument behind this proposal is rooted in
the belief that private arbitration is ill-suited for addressing issues that pertain to national public
policy.31 To exemplify the practical implementation of this notion, the Arab Investment Court,
established within the framework of the Unified Agreement for the Investment of Arab Capital in
the Arab States, stands as a compelling illustration with its extensive three-decade history of
jurisprudence.32

3.2 Advantages and potential benefits of a Pan African Investment Court

With the establishment of the Pan African Investment Court, an avenue for host states to
effectively exercise their regulatory powers and implement their democratic decisions without
the hindrance of potential arbitral actions from investors would be provided. 33 The ability of
African states to regulate their respective countries in an efficient manner has been significantly
limited due to apprehensions of arbitral claims from foreign investors. The detrimental impact of

27 Ibid
28 Nicolette Butler and Surya Subedi, ‘The Future of International Investment Regulation: Towards a World
Investment Organisation?’ (2017) 64 Netherlands International Law Review 43.
29 Marc Bungenberg and August Reinisch, From Bilateral Arbitral Tribunals and Investment Courts to a
Multilateral Investment Court (Springer Berlin Heidelberg 2020).
30 See UNCTAD, Reform of Investor-State Dispute Settlement: In Search of a Roadmap, IIA Issue Note No. 2 (June
2013) 9.
31 Ibid
32 Michael Farchakh, ‘The Arab Investment Court and Intra-Arab BITs: A Potential New Frontier?’ (Kluwer
Arbitration Blog29 December 2020) <https://arbitrationblog.kluwerarbitration.com/2020/12/29/the-arab-
investment-court-and-intra-arab-bits-a-potential-new-frontier/> accessed 18 May 2023.
33 Uché Ewelukwa Ofodile, ‘African States, Investor–State Arbitration and the ICSID Dispute Resolution System:
Continuities, Changes and Challenges ’ (2020) 34 ICSID Review - Foreign Investment Law Journal 296.
investment arbitration is also evident in the negotiation stages of treaties, as developing nations
face immense pressure to agree to unfavourable terms in their quest to attract foreign direct
investments.34 The implementation of an investment court system has the potential to
significantly enhance the consistency and predictability that is associated with the resolution of
investor-state disputes.35 It has been widely acknowledged by scholars, such as Chen 36, and
Onyema,37 that the role played by local courts in resolving investor-State disputes is of utmost
importance, to the point that they may be viewed as indispensable. Moreover, it is important to
note that these aforementioned initiatives possess the capability to contribute significantly
towards the enhancement and progression of the role of African States as active and influential
participants in the development, establishment, and enforcement of investment regulations,
policies, and guidelines, thereby transforming them from mere passive recipients of rules and
regulations to active and authoritative creators and implementers of the same. 38

In accordance with Nyombi's perspective, the establishment of a Pan-African Investment Court

offers three significant advantages.39 Firstly, it would mitigate the need for recourse to Investor-
State Dispute Settlement (ISDS), at least concerning intra-African Bilateral Investment Treaties
(BITs) or for those states that have chosen to participate. By applying principles of public
international law, this court would enable states to regulate crucial social matters, such as
environmental protection and human rights, without being perceived as unfriendly to investors.
Currently, states have had to restrict their regulatory autonomy in order to maintain their
investor-friendly status, thus prompting investors to believe that their investments will be secure.
The investor-friendly categorization has somewhat positioned developing countries in a stronger
negotiating position, given the benefits that investment can bring, such as job creation and
infrastructure development.40 By transcending this traditional classification of nations and

34 Mavluda Sattorova, The Impact of Investment Treaty Law on Host States (Bloomsbury Publishing 2018).
35 International Bar Association, 'Consistency, efficiency and transparency in investment treaty arbitration' (2018),
Committee Report on Investor-State Dispute Resolution reform
36 Richard C Chen, ‘Bilateral Investment Treaties and Domestic Institutional Reform’ (University of Maine School
of Law Digital Commons 2017) <http://digitalcommons.mainelaw.maine.edu/faculty-publications/78> accessed 14
May 2023.
37 Emilia Onyema, ‘Reimagining the Framework for Resolving Intra-African Commercial Disputes in the Context of
the African Continental Free Trade Area Agreement’ [2019] World Trade Review 1.
38 See Mathew Happold, ‘OUP Accepted Manuscript’ (2019) 34 ICSID Review - Foreign Investment Law Journal.
39 Chrispus Nyombi, ‘Towards a New International Economic Order: Proposal for a Pan-African Investment Court.’,
Rethinking the Role of African National Courts in Arbitration Kluwer Law International (Wolters Kluwer 2018).
40 Ibid n29
adopting principles of public international law, the Pan-African Investment Court could facilitate
foreign direct investment (FDI) in countries that have historically received limited attention from
investors due to their unwillingness to compromise on social values. Consequently, the proposed
court and its associated institutions could contribute to a more inclusive and equitable global
system for distributing wealth and investment.41

Another critical benefit of the Pan-African Investment Court is that it has the potential to
enhance predictability and uniformity in resolving investment disputes within Africa. A notable
illustration of the existing challenge of inconsistency in international investment law can be seen
in the Lauder arbitrations, where two investment tribunals reached different verdicts despite
having identical facts, legal norms, and parties involved. 42 The absence of consistency has long
been a problem in this field. 43 However, if a majority of investment disputes are resolved within
a single institution, it can promote consistency in interpreting the specialized laws governing
international investment, and ultimately, the outcomes of disputes. Over time, a Pan-African
Investment Court equipped with an appellate mechanism would amass a body of legal
precedents, thus fostering consistency and predictability in decision-making processes.44

Furthermore, a Pan-African Investment Court would bring about a third crucial advantage. It
would help create a more predictable and fair system for resolving investment disputes within
Africa. We've long grappled with the problem of inconsistency in international investment law.
Take, for instance, the Lauder arbitrations, where two separate investment tribunals reached
different conclusions even though the facts, legal principles, and parties involved were identical.
This lack of uniformity has been a persistent issue. However, with the establishment of a Pan-
African Investment Court that handles the majority of investment disputes, we can foster greater
consistency in interpreting the specialized laws that govern international investment. This means
that the outcomes of disputes will become more predictable and reliable. By introducing an
appellate mechanism, the Pan-African Investment Court will gradually build up a body of legal

41 Ibid n29
42 Ibid n29
43 Mariel Dimsey, The Resolution of International Investment Disputes: Challenges and Solutions (Eleven
International Pub 2008).
44 Ibid n29
precedents, ensuring that decision-making processes become more consistent and transparent
over time.45

3.3 Alignment of a PAIC with the values of the African people and the global
community

This subsection highlights how a PAIC can align with the values of the African people and the
broader global community. It emphasizes the importance of creating a dispute resolution
mechanism that reflects cultural, social, and economic considerations, while also meeting
international standards of justice and accountability. The alignment of a Pan-African Investment
Court with the values of the African people and the global community is important. I place
emphasis on the significance of ensuring that the court's design, processes, and decision-making
reflect the values held by the African people and the global community. 46 In the African context,
cultural and social values rooted in principles of community, collaboration, and respect for
diverse perspectives should be considered.47 Furthermore, the court should prioritize
socioeconomic development48 by promoting sustainable investment practices that prioritize
social welfare, job creation, and infrastructure development. 49 Aligning with the global
community necessitates addressing human rights and environmental concerns, ensuring fairness,
transparency, and accountability.50 By aligning with these values, a Pan-African Investment
Court can enhance legitimacy, promote responsible business conduct, attract investment, and
contribute to sustainable development.51 However, challenges include balancing cultural values
with universal human rights standards, ensuring effective representation, and managing conflicts
of interest.52 Addressing these challenges requires comprehensive consultation processes and the
45 Ibid n29
46 See Makane Moïse Mbengue and Stefanie Schacherer, ‘The “Africanization” of International Investment Law:
The Pan-African Investment Code and the Reform of the International Investment Regime’ [2017] The Journal of
World Investment & Trade 414.
47 Makane Moïse Mbengue and Stefanie Schacherer, Africa and the Rethinking of International Investment Law
(Oxford University Press 2018).
48 See the 2016 AFSIL Principles on International Investment for Sustainable Development in Africa.
49 See United Nations, ‘Root Causes of Conflicts in Africa Must Be Addressed beyond Traditional Response, Special
Adviser Tells Security Council Debate on Silencing Guns | UN Press’ (press.un.org30 March 2023)
<https://press.un.org/en/2023/sc15249.doc.htm> accessed 18 May 2023.
50 Silvia Steininger, ‘The Role of Human Rights in Investment Law and Arbitration: State Obligations, Corporate
Responsibility, and Community Empowerment’ [2020] SSRN Electronic Journal.
51 ViñualesJorge E, Foreign Investment and the Environment in International Law (Cambridge University Press
2013).
52 Ibid n4
inclusion of local communities and civil society organizations. 53 Overall, aligning a Pan-African
Investment Court with the values of the African people and the global community holds the
potential for transformative impact in resolving investment disputes.54

4.0 The Regime Bias Model in Investor-State Arbitration

4.1 Understanding the Concept of regime bias

In explaining the concept of regime bias in investor-state arbitration, the explores how
international trade rules often favour developed countries over Third World nations, leading to
unequal outcomes and a power imbalance in the arbitration process is covered here. The concept
of regime bias, as explored in various scholarly perspectives, challenges the notion that adverse
outcomes experienced by Third World nations within the international legal framework are
inevitable or solely attributable to a commitment to free market rules. 55 Shalakany argues that
bias, often perceived in the context of international law's interaction with the Third World, is not
solely the result of explicit doctrines or institutions but rather emerges from the inherent
indeterminacy of international law itself.56 Furthermore, Third World contestations of regime
bias highlight the presence of underlying racism rooted in historical colonization and the
perception of these countries as "others" in the international community. This critique suggests
that international institutions may interpret and apply international law in ways that
systematically favour the interests of developed nations over those of the Third World. Gathii,
from the perspective of international economic law, views regime bias as a manifestation of how
the rules of the international trading regime can disempower vulnerable economies, deviating
from the impartiality promised by liberal principles. 57 The theory of regime bias primarily finds
its application in the field of international economic law, 58particularly in the context of market-
oriented development and the shifting locus of negotiations and enforcement of investment and

53 Farouk El-Hosseny, Civil Society in Investment Treaty Arbitration : Status and Prospects (Brill Nijhoff 2018).
54 Innocent Chijindu Ngangah, ‘African Traditional Values in a Fast-Changing World: A Philosophical Analysis’
(Social Science Research Network2020) <https://ssrn.com/abstract=3589196> accessed 18 May 2023.
55 James Thuo Gathii in Richard Falk, Balakrishnan Rajagopal and Jacqueline Stevens, International Law and the
Third World (Routledge 2008).
56 Amr Shalakany, ‘Arbitration and the Third World: A Plea for Reassessing Bias under the Specter of
Neoliberalism’ (2000) 41 Havard International Law Journal 419.
57 Ibid
58 Karin Mickelson, ‘Rhetoric and Rage: Third World Voices in International Legal Discourse’ (Social Science
Research Network1998) <https://ssrn.com/abstract=1856767> accessed 18 May 2023.
trade rules from national to international arenas. 59 This shift has led to investment and trade
disputes being resolved in international arbitral and dispute settlement fora, which are often
beyond the control of Third World states.60

4.2 Third World Approaches to International Law (TWAIL) perspective

In setting out, I examine the Third World Approaches to International Law (TWAIL) perspective
and its relevance to addressing regime bias. It highlights the importance of considering the
unique challenges faced by developing countries in the context of international investment law.

The scholarship and practice of international law always have seemed to favour certain locations
while excluding other areas and rendering international activities invisible. 61 The universality of
international law that was seen to conquer and colonize parts of the Third World in the past is
still being propounded as a weapon for imposing European standards on third-world states in the
pretext of supporting human rights or concepts such as good governance or development.
Professor Makau Mutua describes TWAIL as a “broad dialectic of opposition to international
law” that resists the illegitimate, predator, oppressive and unjust regime of international law. 62
Furthermore, Professor James Thuo Gathii contends that “Third World positions exist in
opposition to, and as a limitation on, the triumphal universalism of the liberal/conservative
consensus in international law.”63 Joel Ngugi maintains that international law cannot be reformed
from its own assumptions.64

4.3 Power imbalance between developed countries and Third World nations

This segment delves deeper into the pervasive power imbalance between developed countries
and Third World nations within the ISDS mechanism. In examining the repercussions of this
disparity on the resolution of investment disputes, it illuminates the profound impact on

59 Ibid
60 Antony Anghie, Imperialism, Sovereignty and the Making of International Law (Cambridge Univ Press 2011) 245
245–272.
61 James Thuo Gathii (2021) "The Promise of International Law: A Third World View," American University
International Law Review: Vol. 36 : Iss. 3 , Article 1. Available at:
https://digitalcommons.wcl.american.edu/auilr/vol36/iss3/1
62Makau Mutua, 'What Is TWAIL?' (2000) 94 Proceedings of the ASIL Annual Meeting.
63 James Thuo Gathii, 'Rejoinder: Twailing International Law' (2000) 98 Michigan Law Review.
64 Joel Ngugi, 'Making New Wine In Old Wineskins: Can The Reform Of International Law Emancipate The Third
World In The Age Of Globalization' (2002) 8 UC Davis Journal of International Law and Policy.
outcomes and underscores the compelling case for a fundamental rethinking of the system. With
an emphasis on promoting fairness and inclusivity, this analysis underscores the urgent
imperative to establish a more balanced and impartial framework that redresses the systemic
disadvantages faced by developing nations. It amplifies the call for transformative change, this
segment advocates for a paradigm shift in the ISDS mechanism, ensuring a level playing field for
all parties involved.

The regime bias approach reveals how powerful economies utilize legal interpretations of
international economic law to navigate the complexities of global commerce, benefiting their
own economies by compensating those who lose out in international trade while simultaneously
preventing other countries from doing the same. 65 Consequently, the notion of national economic
control and self-determinacy, which is associated with sovereignty in international law, has lost
its significance.66 The regime bias approach argues that the biased nature of international
economic governance, which tends to favour the interests of developed nations, can be attributed
not only to the institutional and doctrinal framework of international economic law 67 but also to
what it intentionally excludes, disadvantaging the Third World. As a result, Third World
countries have traditionally sought to avoid international dispute resolution whenever possible. 68
However, given the Western states' dominance in international trade 69 and the reluctance of
foreign capital to invest in the Third World without the assurance of international dispute
settlement as a safeguard70 replacing national dispute resolution forums with international ones,
these countries find themselves in precarious economic positions.71

The resolution of disputes between developing nations and investors from industrialized nations
has frequently led to unjust outcomes for the former due to their disadvantaged position in the

65 Ibid
66 Ibid
67 Ibid
68 Anthea Roberts, ‘Incremental, Systemic, and Paradigmatic Reform of Investor-State Arbitration’ (2018) 112
American Journal of International Law 410.
69 Gillian Moon, ‘Trade and Equality: A Relationship to Discover’ (2009) 12 Journal of International Economic Law
617.
70 Sornarajah, M., "Mutations of Neo-Liberalism in International Investment Law" (2011) Trade, Law and
Development 3(1) 203-234.
71 Ibid
global economic system. This is primarily due to their disadvantaged standing within the
overarching international economic system, which inherently places them at a disadvantage. 72

5.0 Building a Credible and Legitimate ISDS Mechanism through PAIC: Strengthening
the Voice and Representation of African Nations in the international investment law
regime

In this subsection I will highlight the significance of a Pan African Investment Court in
strengthening the voice and expression of African nations in the international investment law
regime. It examines how the establishment of a regional investment court can empower African
countries to actively participate in the resolution of investment disputes and shape the
development of investment law and policy.73

Building a credible and legitimate Investor-State Dispute Settlement (ISDS) mechanism through
the creation of a Pan African Investment Court holds immense potential for African nations to
amplify their voice and representation in the international investment law regime. 74 In
establishing a specialized and independent regional court, tailored to address the unique
challenges and aspirations of African countries, we can foster a fair, transparent, and equitable
resolution of investment disputes.75 The Pan African Investment Court would ensure that the
socio-economic and cultural context of Africa is fully considered during the decision-making
process, promoting a deeper understanding of the needs and circumstances of African nations in
line with Agenda 2063.76 This approach would instill trust and confidence among investors,
making Africa an attractive investment destination and propelling sustainable development
across the continent.77 To ensure the court's effectiveness and legitimacy, the active participation

72A good illustration is the case of Process and Industrial Developments Ltd. v. The Ministry of Petroleum
Resources of the Federal Republic of Nigeria.
73 Alli Possi, ‘Africanacity of International Investment Law: A Reflection on Investment Agreements in Africa’
(2021) 113 Journal of Law, Policy and Globalization.
74 See Olabisi D Akinkugbe, ‘Africanization and the Reform of International Investment Law’ [2021] SSRN
Electronic Journal.
75 Augustus A Agyemang, ‘African Courts, the Settlement of Investment Disputes and the Enforcement of Awards’
(1989) 33 Journal of African Law 31.
76 African Union, ‘Agenda 2063: The Africa We Want. | African Union’ (African Union2013)
<https://au.int/en/agenda2063/overview> accessed 18 May 2023.
77 Fiona Stewart, ‘The Elephant in the Room: Bringing Sustainable Investment to Africa’ (blogs.worldbank.org 18
January 2022) <https://blogs.worldbank.org/psd/elephant-room-bringing-sustainable-investment-africa>.
and engagement of African nations would be pivotal. By incorporating diverse perspectives and
experiences, the Pan African Investment Court would authentically represent the interests and
aspirations of African countries78 thereby enhancing its credibility in the eyes of both African
stakeholders and the international community.79 Through the establishment of a Pan African
Investment Court, we can pave the way for a robust and inclusive ISDS mechanism, empowering
African nations to shape international investment law and fostering a more balanced and
equitable global investment regime.80

6.0 Concluding Remarks

In conclusion, the establishment of a Pan-African Investment Court (PAIC) offers a propitious

solution to address the legitimate concerns surrounding Africa's Investor-State Dispute
Settlement (ISDS) mechanism. In redressing the critiques of the current ISDS framework and
assimilating the crucial principles of justice, openness, and inclusivity, the PAIC has the
potential to offer a reliable and valid avenue for settling investor-state conflicts in Africa.
Furthermore, it is worth noting that the PAIC would be the best avenue for aligning with African
values and resonating with the aspirations of the global community for a just and balanced
investment dispute resolution mechanism. Through its implementation, the PAIC can empower
African nations, strengthen their voice, and contribute to the development of a more equitable
and accountable international investment law regime.

78 Ibid n 79
79 James Thuo Gathii, ‘Reform and Retrenchment in International Investment Law’ [2021] SSRN Electronic Journal.
80 Obiajunwa Ama, ‘Investor-State Arbitration and African States: A Proposal for a Pan-African Investment Court’
[2020] SSRN Electronic Journal.
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