Investor-State Disputes In Africa: Emerging Trends In Turbulent Times

Africa has become a focal point where geopolitical tensions between Western states, China and Russia, increased political instability and the global scramble for critical minerals intersect. These forces drive high‑stakes investor-state disputes, many of which take place before arbitral tribunals.

Resource nationalism is not new in Africa. However, the rapid and simultaneous wave of political changes and legal reforms in recent years – often driven by attempts to change profit sharing, oversight and control over natural resources by States, and strengthening positions vis‑à‑vis foreign investors – is unprecedented. Such developments have occurred across Africa, including among others Mali, Burkina Faso, Niger, Guinea-Conakry, Chad, Gabon, Sudan, Côte d'Ivoire, the Democratic Republic of Congo, Nigeria, Cameroon, Madagascar and Central African Republic.

States where these measures are happening share similarities:

• significant mineral wealth providing leverage amid strong global demand;
• acute budgetary pressures;
• rising insecurity and popular dissatisfaction;
• resentment linked to former colonial relationships; and
• a perception that decades of resource extraction have not delivered tangible prosperity locally.

While often not the direct trigger, recent coups or abrupt regime changes have catalysed investor-state disputes. This is due to new or amended legal frameworks, renewed scrutiny of legacy contracts, shifts in enforcement priorities and a greater willingness to resort to more assertive tactics.

In practice, States have resorted to measures such as:

• outright expropriations and nationalisations (eg, in Mali and Niger),
• withdrawal of exploration and exploitation permits (eg, in Guinea-Conakry and Burkina Faso),
• aggressive general audits or tax and customs reassessments (eg, Gabon, DRC),
• termination or forced renegotiation of existing contracts, including in some cases coercive tactics (such as detention of company personnel),
• appointing state administrators in joint-ventures with state‑owned entities, and, sometimes, detaining company personnel (eg, Niger, Mali),

In addition to targeted measures at specific operators, States have taken a harder line on the regulatory framework applicable to the resources sector. This has included:

• revision of local content rules (eg, Mali, Burkina Faso),
• abrupt amendment or replacement of mining legislation without industry consultation, and with immediate application of "public interest" provisions, as well as tax legislation to increase revenues (eg, DRC, Mali),
• aggressive application of FX restrictions, and
• imposing long-arm transfer restrictions (including conditions on tax and local participation) on offshore M&A.

Often, however, the risk is less one of abrupt expropriation or criminal sanctions than of gradual escalation as regulatory, fiscal and administrative measures accumulate, rendering the investment untenable. For integrated mining projects with sensitive pit-to-port logistics reliant on State-owned or controlled infrastructure, this can manifest itself through operational, capacity and access blockages.

A surge in arbitration proceedings and alternative dispute resolution methods

Against this backdrop, several foreign investors whose operations, revenues or ownership have been disturbed have initiated arbitration proceedings against African states, sometimes running parallel cases under contracts, investment laws and treaties (eg, Orano versus Niger).

Since 2024, the ICSID registered 31 cases against African States, while the ICC's 2024 report also recorded an uptick in such disputes.

However, many disputes never reach the public domain due to confidentiality or amicable resolution. In the current environment, alternative dispute resolutions methods such as negotiations, expert determinations, mediation or informal settlement discussions are widely used, particularly where operational continuity or employees' safety is at stake.

Practical implications for investors

These developments have had a chilling effect on boardroom risk assessments and project finance. Many companies now restrict travel of senior executives, accelerate settlement discussions or regularly reassess their exposure and the possibility to restructure their investments to benefit from treaty protection to mitigate the impact of State action ahead of time.

There are ways in which investors can mitigate risks:

• careful structuring in advance: structure investments to ensure they benefit from treaty protection before any dispute arises; run lender-style bankability checks during negotiations to catch project-on-project risks pre-FID; consider SPVs for critical infrastructure;
• contractual safeguards: include neutral dispute resolution mechanisms, stabilisation and material adverse change / economic equilibrium safeguards, waivers of sovereign immunity and carefully calibrated force majeure, termination, liability and compensation mechanisms, State support and umbrella clauses;
• non‑contractual instruments: leverage investment treaties and domestic investment laws; maintain strong diplomatic ties, communication channels with local governments; and engage commercial attachés for dispute prevention;
• insurance: consider political risk insurance early in the project’s lifecycle and adjust insurance coverage regularly as required;
• monitoring: monitor rights and benefits against legal changes; track and supervise compliance with tax, export controls and sanctions; track communications with authorities and document compliance with legal requirements (eg, timing for declarations, notifications and submissions);
• dispute management: consider the full range of tactical options throughout potential or actual legal proceedings (including leveraging pre-litigation phases, expert proceedings and mediation, parallel proceedings in multiple fora, etc.);
• if a dispute arises, use interim measures, where available, to address urgent risks to assets and personnel and potentially foster a settlement agreement.

Looking ahead

Investor-state disputes in Africa are evolving in form and intensity rather than receding. Tensions are likely to persist between States asserting greater control over strategic resources and investors navigating an increasingly politicised operating environment. Those understanding the dynamics – and preparing for them – will be best placed to protect value on a turbulent but opportunity‑rich continent.

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