Advice and Opinion

Proposed mediation with foreign investors welcomed by SAPOA


SAPOA represents the economically significant property-owning sector of the economy and good relations with foreign investors is important to our members. The recently announced mediation process in the Protection of Investment Act draft regulations is therefore a welcome proposal.

The first step to resolving any dispute should be mediation, as the Act and regulation proposes. The fact that the law requires mediation using qualified mediators of high moral character and recognised competence who are appointed by agreement between the government and the foreign investor greatly improves the chance of international investment disputes being resolved.

SAPOA rejects recent criticism of the process in the media complaining that the government has a veto over any referral to mediation. Every mediation requires positive input from all parties to the mediation. The parties will be required by the regulations to act in accordance with the rules of the mediation and the reasonable directives of the mediator in a spirit of cooperation with a view to actively seeking resolution of the dispute. It is highly unlikely that, with this opportunity in hand, the government will churlishly veto a request for mediation by an unhappy investor. The regulations include a careful process for declaring the dispute and discussing the issues at stake. The guidance of an experienced mediator is a positive approach. This is especially so because the mediator must maintain good institutional and personal relations between the parties to the dispute.

International arbitration of disputes has been notoriously slow and expensive with often unsatisfactory outcomes. Mediation under the regulations is not, as has been suggested, a substitute for arbitration. The Protection of Investments Act leaves the road to arbitration open and the government must adopt a fair administrative process according to the Bill of Rights if it does not want an unsuccessful mediation resulting in arbitration proceedings.

SAPOA therefore does not agree with the criticism of the proposed mediation process in the draft Protection of Investment regulations and urges all parties to adopt a constructive attitude to encouraging foreign investment and good relations with investors generally.