In January 2014, Jones Day reported on the protection offered to foreign investors in Sub-Saharan Africa pursuant to the Southern African Development Community ("SADC") enacted on April 16, 2010. As noted in that Commentary, the SADC Protocol on Finance and Investment ("Protocol") contains international protections for foreign investors in the SADC that resemble those typically contained in bilateral investment treaties ("BITs"). The Protocol permits foreign investors to initiate binding international arbitration proceedings directly against member states, which may result in enforceable damages awards. Although sparingly invoked in the seven years since the Protocol came into force, investor–state arbitration is an important tool to manage the political risks inherent in making major investments in this emerging region.

The Protocol was a sharp departure from most treaties with investment protection, which generally provide protection only to investors of other signatory states, as defined by their nationality, place of incorporation, or corporate seat. The text of the original Protocol, however, allows affected investors from any other state to bring investment claims against SADC member states for breaches of its prohibition on nationalization and guarantee of fair and equitable treatment.

In August 2016, SADC member states implemented crucial changes in the SADC to curtail this broad offer of treaty protection. First, the SADC member states deleted the provisions on fair and equitable treatment and replaced them with national treatment standards, thereby curtailing the scope of substantive, international law protections for foreign investors. Second, the SADC member states amended the treaty to offer protection only to investors of an SADC member state investing in another member state.

It is unlikely the original version will remain in force as member states begin to ratify the new treaty. The lack of survival clause in the current treaty leaves open the question of how existing investments in SADC member states will be affected by these amendments and how those seeking protection based on the older version of the treaty will be treated.

For now, investors in the SADC region should pay careful attention to structuring disputes through a BIT-covered state to ensure maximum investment protection without reliance on the SADC Treaty.