Pretoria- Government has welcomed the successful conclusion of the international arbitration proceedings that were brought against the country challenging its mining laws.
Government said it was pleased that arbitration proceedings brought against South Africa in 2006, challenging the Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA) and the Broad-Based Black Economic Empowerment Mining Charter had been concluded.
"In an award issued on Wednesday, the arbitral tribunal formally dismissed the claims and ordered the claimants to contribute 400 000 Euros (approximately R3.8 million) to the government's costs," said the Departments of Trade and Industry (DTI) and Mineral Resources in a joint statement.
The tribunal's final decision also included that claims made by the claimants be dismissed with prejudice.
The claimants, who were foreign investors in the dimension stone industry, had argued that government had settled the claims against it. However, the tribunal did not accept that argument.
According to the statement, the tribunal noted that "the claimants applied unilaterally for the discontinuance of the proceedings" and that this was an "application opposed by" the government. The tribunal further noted that the very fact that the question of costs was before it "calls into question the idea that there is an agreed settlement terminating these proceedings".
The tribunal further said that foreign investors who start international investment arbitrations "cannot expect to leave respondent States to carry the costs of defending claims that are abandoned".
The MPRDA, which came into force in 2004, established a new dispensation designed to redress historical inequities in the mining sector and to promote the efficient development of the sector into the future. As part of the transition to this new dispensation, holders of existing "old order" mining rights were entitled to have those rights converted into "new order" MPRDA rights.
Most old order rights holders, domestic and foreign, pursued the conversion process. A group of investors in the granite industry chose to bring an international arbitration, claiming that the MPRDA and the Mining Charter violated international law.
However, as the April 2009 deadline for conversion approached, the claimants' South African operating companies did lodge their old order rights for conversion, and the decision to convert them was made in terms of the MPRDA and the Mining Charter. It was then that the claimants sought to withdraw their claims.
As has been the case with other mining companies, the conversion process has enabled these claimants to continue their operations uninterrupted. Protecting security of tenure was one of Parliament's stated purposes in adopting the MPRDA, and this result shows that the MPRDA succeeds in that aim.
"The government welcomes the tribunal's recognition that the claimants and the government have put the adversarial process behind them and started rebuilding the relationship of trust and mutual commitment between investor and host government," said the DTI and Mineral Resources Department.
The government also welcomed the claimants' commitment to beneficiate granite in SA.
