When foreign investors enter a new market, they become subject to that country’s jurisdiction. What this would generally imply is that foreign investors would be subject to the laws and regulations of the host country, no matter how favourable or unfavourable to the investor. However, recent worldwide trends have focused on eliminating discrimination against foreign investors, by applying international standards of equity (for example, fair and equitable treatment and, to a less extent, most-favoured nation (MFN) or national treatment (NT)).

Countries have accomplished this by entering into international treaties, creating a complicated web of international and domestic laws and agreements that foreign investors must navigate when entering new jurisdictions.

In Africa, foreign investments are regulated by host state laws, by Regional Economic Communities (RECs), by continental agreements, by multinational and bilateral treaties, and under investment agreements. Navigating the pool of differing regulations can prove challenging, and lead to confusion or frustration for foreign investors. Before delving into the current landscape for dispute settlement, to be discussed in the following chapters, this chapter provides a general overview of the types of investment regulations and how each type of regulation interplays with the others. When looking at these governing regulations, important considerations that are particularly pertinent to the African context arise. Chief considerations include looking at the extent to which the freedom and actions of State Parties are limited under each regulation type, and at the extent to which developing countries that are State Parties to these agreements are able to continue making the key decisions necessary to promote their own development. Under the latter topic, it is important to consider how much a State Party is able to influence the amount and type of foreign investment they receive, as well as the conduct of foreign investors in their country.

1. DOMESTIC LAWS

Each country on the African continent has its own unique laws and regulations that govern investment and business-related matters within its territory. These laws may include investment laws, company laws, tax laws and/or securities laws, all of which directly govern business matters. Apart from these types of laws, it is also necessary to consider secondary laws that may have an impact on business operations in a country.