Picture: ISTOCK
Picture: ISTOCK

Cape Town — The government has published draft regulations that will govern the way disputes between investors and government are to be mediated.

The draft rules on mediation, which fall under the Protection of Investment Act, were promulgated in the Government Gazette on Friday.

The issue of mediation was one of the hot topics of debate when the controversial act was deliberated in Parliament last year.

The act came in the wake of the termination of SA’s bilateral investment treaties and established a uniform regime for foreign investment in the country.

The act also eliminated the system of international arbitration of disputes, which was provided for under the bilateral investment treaties, and replaced it with a system of mediation or legal action.

The aim of the act was to open up policy space for government without its actions being attacked as expropriation or the infringement of property rights.

The draft regulations published in the government gazette on Friday will apply where government and the foreign investor agree to submit a dispute to mediation.

This dispute must relate to an action taken by government which affects the investment of the foreign investor and is regarded as a breach of the protection provided for in the act.

The mediator will be appointed by agreement between the investor and government from a list of suitably qualified mediators maintained by the Department of Trade and Industry.

If there is no list, the department or the investor may nominate a mediator who will be appointed if the other party consents.

If the department is party to the dispute, the parties may ask the judge president of one of the divisions of the high court to appoint a mediator whose role will be to facilitate a negotiated settlement to the dispute.

Any party can apply for the recusal of the mediator if they believe the mediator may not be independent or impartial but this can only happen if "cogent and justifiable grounds" are presented.

If the mediator refuses the recusal request a mediator appointed by the department must resolve the dispute and this decision will be final.

The investor will have to declare a dispute within six months of becoming aware of the dispute.

In terms of the draft regulations, the parties to a dispute "shall conduct themselves in a spirit of cooperation with the view of actively seeking a resolution of the dispute in an amicable and consensus-seeking fashion".

The proposed rules set out the process to be followed in declaring a dispute.

Any party to the mediation can terminate it and all information supplied for purposes of the mediation will be confidential.

The fees and costs of the mediation will be borne jointly by the parties to the dispute unless they agree otherwise.

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