In late 2017, South Africa modernized its International Arbitration Act (the “IAA”) and showed potential to become the arbitral seat of choice for arbitrations involving African parties. Just a few months later, however, South Africa took a step in the opposite direction when its Protection of Investment Act 22 of 2015 came into effect and replaced all of South Africa’s bilateral investment treaties (“BITs”) with watered-down protections for foreign investors and no right to investor-State arbitration.

These mixed signals have serious implications for foreign investors looking to invest in South Africa, who should assess their investment risks against this background. On balance, foreign investors entering into commercial contracts with South African parties may consider South Africa the agreed seat for arbitration, while new investors investing in South Africa should channel their investments through countries that have BITs with South Africa that have not yet been terminated.