MIL5903
Assignment 1 2026
Unique number:
Due date: 27 May 2026
BALANCED CLAUSES FOR A LESOTHO ZAMBIA BILATERAL INVESTMENT TREATY
1. Introduction
Lesotho and Zambia need a bilateral investment treaty that attracts real investment without
giving away too much public power. A BIT is not only a document for investors, because it
also shapes how a state may regulate land, mining, taxation, labour, health, the environment
and public services. The proposed treaty should therefore be written with care, because
wide investor rights may later be used to challenge ordinary decisions made by government.
Investment law has moved away from the older style where investor protection was treated
as the main purpose of the treaty. The better view is that the treaty should protect lawful
investment while also keeping enough space for both states to govern in the public interest. 1
The SADC Model BIT is useful here because it links investment protection to sustainable
development and not only to private profit.1 This is important for Lesotho and Zambia
because both states still need policy freedom to deal with poverty, infrastructure,
employment and development.1
,BALANCED CLAUSES FOR A LESOTHO ZAMBIA BILATERAL INVESTMENT
TREATY
Keywords
Bilateral investment treaty; foreign investment; Lesotho; Zambia; investor protection;
host state regulation; fair and equitable treatment; expropriation; dispute settlement;
sustainable development.
Abbreviations and acronyms
BIT: Bilateral Investment Treaty
FET: Fair and Equitable Treatment
ISDS: Investor State Dispute Settlement
MFN: Most Favoured Nation
SADC: Southern African Development Community
ICSID: International Centre for Settlement of Investment Disputes
UNCITRAL: United Nations Commission on International Trade Law
, 1. Introduction
Lesotho and Zambia need a bilateral investment treaty that attracts real investment
without giving away too much public power. A BIT is not only a document for
investors, because it also shapes how a state may regulate land, mining, taxation,
labour, health, the environment and public services. The proposed treaty should
therefore be written with care, because wide investor rights may later be used to
challenge ordinary decisions made by government. Investment law has moved away
from the older style where investor protection was treated as the main purpose of the
treaty. The better view is that the treaty should protect lawful investment while also
keeping enough space for both states to govern in the public interest. 1 The SADC
Model BIT is useful here because it links investment protection to sustainable
development and not only to private profit.2 This is important for Lesotho and Zambia
because both states still need policy freedom to deal with poverty, infrastructure,
employment and development.3
A balanced BIT must begin with a clear definition of investment, because this clause
decides which assets will receive treaty protection. If the definition is too wide,
almost every commercial interest may be treated as an investment, even where
there is no long term contribution to the host state. The treaty should therefore
protect investments that involve commitment of capital, risk, duration and a
contribution to development.4 This approach is supported by the well known
investment test used in Salini v Morocco, where the tribunal considered contribution,
duration, risk and development contribution as useful features of an investment.5 The
same idea fits Lesotho and Zambia because both states should not protect
speculative claims that do not bring meaningful economic value. A careful definition
can also exclude ordinary commercial sales, short term loans, public debt and claims
that arise only from contracts.6
1 M Sornarajah, The International Law on Foreign Investment (5th edn, Cambridge University Press
2021) 89.
2 Southern African Development Community, SADC Model Bilateral Investment Treaty Template with
Commentary (SADC 2012) art 1.
3 UNCTAD, Investment Policy Framework for Sustainable Development (UNCTAD 2015) 11.
4 Sornarajah, The International Law on Foreign Investment 92.
5 Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco ICSID Case No ARB/00/4,
Decision on Jurisdiction, 23 July 2001, para 52.
6 SADC Model BIT art 2.
Assignment 1 2026
Unique number:
Due date: 27 May 2026
BALANCED CLAUSES FOR A LESOTHO ZAMBIA BILATERAL INVESTMENT TREATY
1. Introduction
Lesotho and Zambia need a bilateral investment treaty that attracts real investment without
giving away too much public power. A BIT is not only a document for investors, because it
also shapes how a state may regulate land, mining, taxation, labour, health, the environment
and public services. The proposed treaty should therefore be written with care, because
wide investor rights may later be used to challenge ordinary decisions made by government.
Investment law has moved away from the older style where investor protection was treated
as the main purpose of the treaty. The better view is that the treaty should protect lawful
investment while also keeping enough space for both states to govern in the public interest. 1
The SADC Model BIT is useful here because it links investment protection to sustainable
development and not only to private profit.1 This is important for Lesotho and Zambia
because both states still need policy freedom to deal with poverty, infrastructure,
employment and development.1
,BALANCED CLAUSES FOR A LESOTHO ZAMBIA BILATERAL INVESTMENT
TREATY
Keywords
Bilateral investment treaty; foreign investment; Lesotho; Zambia; investor protection;
host state regulation; fair and equitable treatment; expropriation; dispute settlement;
sustainable development.
Abbreviations and acronyms
BIT: Bilateral Investment Treaty
FET: Fair and Equitable Treatment
ISDS: Investor State Dispute Settlement
MFN: Most Favoured Nation
SADC: Southern African Development Community
ICSID: International Centre for Settlement of Investment Disputes
UNCITRAL: United Nations Commission on International Trade Law
, 1. Introduction
Lesotho and Zambia need a bilateral investment treaty that attracts real investment
without giving away too much public power. A BIT is not only a document for
investors, because it also shapes how a state may regulate land, mining, taxation,
labour, health, the environment and public services. The proposed treaty should
therefore be written with care, because wide investor rights may later be used to
challenge ordinary decisions made by government. Investment law has moved away
from the older style where investor protection was treated as the main purpose of the
treaty. The better view is that the treaty should protect lawful investment while also
keeping enough space for both states to govern in the public interest. 1 The SADC
Model BIT is useful here because it links investment protection to sustainable
development and not only to private profit.2 This is important for Lesotho and Zambia
because both states still need policy freedom to deal with poverty, infrastructure,
employment and development.3
A balanced BIT must begin with a clear definition of investment, because this clause
decides which assets will receive treaty protection. If the definition is too wide,
almost every commercial interest may be treated as an investment, even where
there is no long term contribution to the host state. The treaty should therefore
protect investments that involve commitment of capital, risk, duration and a
contribution to development.4 This approach is supported by the well known
investment test used in Salini v Morocco, where the tribunal considered contribution,
duration, risk and development contribution as useful features of an investment.5 The
same idea fits Lesotho and Zambia because both states should not protect
speculative claims that do not bring meaningful economic value. A careful definition
can also exclude ordinary commercial sales, short term loans, public debt and claims
that arise only from contracts.6
1 M Sornarajah, The International Law on Foreign Investment (5th edn, Cambridge University Press
2021) 89.
2 Southern African Development Community, SADC Model Bilateral Investment Treaty Template with
Commentary (SADC 2012) art 1.
3 UNCTAD, Investment Policy Framework for Sustainable Development (UNCTAD 2015) 11.
4 Sornarajah, The International Law on Foreign Investment 92.
5 Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco ICSID Case No ARB/00/4,
Decision on Jurisdiction, 23 July 2001, para 52.
6 SADC Model BIT art 2.
