Piero Foresti, Laura de Carli and others v Republic of South Africa

Forum: International Centre for Settlement of Investment Disputes
INTERIGHTS' role: Granted leave to intervene
Keywords:  Equality, development

INTERIGHTS was part of a coalition which requested to intervene in Piero Foresti, Laura de Carli and others v Republic of South Africa arguing that South Africa’s bilateral investment treaties should not be read in a way that conflicts with its human rights obligations under its own constitution or under international treaties that it has signed up to.

It was also the first time ever that an International Centre for Settlement of Investment Disputes (ICSID) tribunal has granted amicus organisations access to the parties' documents despite the objections of a party.

In addition it was the first time that a tribunal has expressed interest in comment from the parties and the amici on its Non Disputing Parties (NDP) procedure.  The tribunal indicated that it would afford the parties and the NDPs an opportunity to comment on the prescribed NDP process, essentially committing itself to engage with the contentious question of NDP participation in ICSID arbitrations on a level never before seen. 

In an action that could have enormous ramifications for the millions of people left marginalised by the policies of the apartheid era, as well as for South Africa‟s mining industry, a group of European investors claimed that the South African government has taken away their mineral rights without providing adequate compensation.

The European investors - several Italian citizens and Luxembourg corporations - were claimants in a case (Piero Foresti, Laura de Carli and others v Republic of South Africa) filed in 2007 before an arbitration tribunal constituted under the World Bank‟s International Centre for Settlement of Investment Disputes. The investors hold stakes in granite quarrying companies in South Africa. They argued that the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) effectively extinguishes their mineral rights without providing adequate compensation and unfairly discriminates against them.

The MPRDA was introduced to partially fulfil the South African government‟s obligations to advance equality in the country, including with respect to the nation‟s natural resource wealth. Under the MPRDA, both domestic and foreign mining companies are required to submit applications to convert their 'old-order' mineral rights into 'new-order' rights. In order to successfully convert their rights, a company must fulfil criteria that include the submission of an environmental protection plan and the achievement of certain Broad Based Black Economic Empowerment targets. The investors alleged that fulfilling these criteria would render their 'new' rights of lesser value than the 'old' ones, in breach of South Africa‟s obligations under two of its bilateral investment treaties.

However, the South African government maintained that the MPRDA conversion procedure does protect the security of tenure of mining and prospecting rights and complies with South Africa‟s commitments under domestic and international law. The Government maintains that the Black Economic Empowerment targets contained in the Act are necessary to redress the devastating socio-economic impact of apartheid.

Four non-governmental organisations (NGOs) joined together in seeking to assist the international arbitration tribunal in interpreting the relevant South African mining legislation in light of the country‟s constitutional and international human rights obligations. Two of South Africa‟s leading human rights organisations, the Centre for Applied Legal Studies (CALS) and the Legal Resources Centre (LRC), have a track record of having litigated hundreds of human rights cases in South African courts over the past 30 years. They worked with the Center for International Environmental Law (CIEL), and INTERIGHTS - two major international NGOs with expertise in litigating international human rights and environmental issues. In coalition, the four NGOs sought to comment on how the Tribunal might consider the crucial domestic and international human rights issues that the dispute raises.

More specifically, their comments intended to address the extent of South Africa's legal obligations to promote both human rights - such as the right to equality - and sustainable, equitable development. They would also have demonstrated the relevance of these obligations in relation to the interpretation of South Africa‟s bilateral investment treaties. The NGOs' aim was to assist the Tribunal in resolving the dispute fairly while at the same time avoiding any conclusion that would create conflict between South Africa‟s legal obligations arising from bilateral investment treaties and human rights treaties.

On 28 April 2010 the Tribunal decided to discontinue the arbitration as the parties agreed that the claim would not proceed.

Click here to read the petition
Click here to read coverage on Investment Treaty News (11 October 2009)
Click here to read the joint press release (19 October 2009)

INTERIGHTS contact: Iain Byrne, Senior Lawyer, Economic and Social Rights, ibyrne@interights.org