Experts caution Uganda on investment treaties

Trade, Investment and Regional Integration expert Mr Martin Luther Munnu (right) taking notes as the Program Officer, Trade and Investment at SEATINI-Uganda, Ms Faith Lumonya discusses matters around investment treaties during a dialogue in Kampala. Photo by Ismail Musa Ladu

Uganda risks selling her legal rights to prevail over defaulting investors if the country does not stop entering into dubious investment treaties, continental trade specialist and experts on treaties and negotiations have warned.

According to the experts, most Bilateral Investment Treaties (BITs) are not just used by investors to inform their investment decisions, but are increasingly becoming tools used to sue States in a foreign or international court.

It is for this reason that most BITs include an Investor-State Dispute Settlement (ISDS) provision, which companies are using to sue African States for loss of future profits due to, for example new government regulations or a cancellation or amendment of a contract.

Ms Faith Lumonya, the programme officer, Trade and Investment, Southern and Eastern African Trade, Information and Negotiations Institute Uganda, said in order to preserve the right of Uganda and that of other African states to regulate the actions of investors in the public’s interest without being sued by investors, they need to go slow into signing such agreements.

“As civil society groups and trade unions from the African continent, we are writing to express our concern about how BITs, and specifically the Investor State Dispute Settlement (ISDS) provision are unfairly being used by investors to sue states for millions of dollars,” reads a statement issued by the civil society groups and Trade Unions in the United Republic of Tanzania and Global Union Federations of the various Regional Economic Communities of the African continent.

Experts have estimated Africa’s loss due to legal claims by investors since 1993 at $55.5b. This figure could double, however, the estimates were only limited to the amount claimed by the investor in 54.7 per cent of all the cases.