This article examines the rejection of the International Investor–State dispute (ISDS) system across the African continent and its replacement with a range of domestic and regional alternatives. It assesses the advantages of the two principal options for African countries: retaining the current ISDS system, or using local courts and regional tribunals. To this end, the dispute resolution mechanisms proposed in the Pan-African Investment Code, the 2016 Southern African Development Community Finance and Investment Protocol, the SADC model BIT, the Common Market for Eastern and Southern Africa, Economic Community of West African States and East African Community investment agreements and domestic approaches are critically examined. The argument is then advanced that African countries should not abandon ISDS because replacing it with isolated domestic or regional mechanisms does not reduce any of the risks. In particular, for foreign investors, the risk associated with the adjudication of investment disputes in potentially biased, politically influenced domestic courts may prove too high. African host nations, in turn, risk sending out the wrong message concerning their commitment to the protection of foreign investments. Instead of veering off course, perhaps the time has come for African States to display the political will to remain within the ISDS system and contribute to its reform from within.

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In late 2015, the South African government terminated all bilateral investment treaties it had signed with European countries and promulgated the Protection of Investment Act. Among the changes to the country's foreign investment regime introduced by the new Act is the removal of international investment arbitration at the International Centre for the Settlement of Investment Disputes (ICSID). An overview of recent developing-world trends points to an eagerness to facilitate a better balance between foreign investors' interests and those of the host state. In most instances, this is done by introducing domestic courts and tribunals as both first and last resort for foreign investment disputes. Against this backdrop, South Africa's move away from investor-state dispute settlement was not completely unexpected. Questions can however be raised as to whether this is an outright rejection of investor-state dispute settlement, without first establishing some sort of alternative capacity-wise. The article concludes that, in resource-constrained times, it might have been more prudent to safeguard valuable inflows of investment and resist scrapping investor-state dispute settlement in its entirety, at least until workable alternatives-such as the creation of a regional, custom-made investment arbitration system-have been secured. How to cite: Qumba 'South Africa's move away from international investor-state dispute: a breakthrough or bad omen for investment in the developing world?' 2019

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Over the past few years, the international Investor-State Dispute Settlement (ISDS) mechanisms have been confronted with an unprecedented level of scrutiny, and the system's legitimacy is being questioned by both developed and developing countries alike. This article presents a proposal for the adoption of the old customary international law rule of exhaustion of local remedies in the upcoming Investment Protocol of the African Contin en tal Free Trade Agreement (AfCFTA). It observes that the ISDS mechanism that will be developed under the AfCFTA framework is likely to be shaped by the legitimacy crisis in investment treaty arbitration and ongoing global debates about the reform of the ISDS mechanisms. In particular, the ISDS debate in the African region will continue to characterise and potentially derail the negotiations of the AfCFTA Protocol on Investment. The main contention is that adopting the exhaustion of local remedies under the AfCFTA Protocol on Investment before recourse is had to the ISDS is arguably the single reform with the greatest potential to foster a balanced investment dispute resolution mechanism and reduce political opposition to ISDS while still providing investors with access to ISDS when domestic remedies are inadequate. The article finally proposes a drafting suggestion for the adoption of the exhaustion of local remedies rule into the ISDS provision of the AfCFTA Protocol on Investment. Keywords: Exhaustion of local remedies; African Continental Free Trade Area; Investment Protocol; ISDS; African courts.