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Best Practices Advisory Bulletins

IISD believes it is important to understand the evolving scope and nature of investment treaty negotiations, in particular from the developing country and sustainable development perspectives. This includes new provisions on investor responsibilities that may soon emerge, institutional developments in regional agreements, as well as variations on traditional texts relating to investor rights and Investor–State dispute settlement. Drawing on public treaty texts and different Model Agreements produced by governments, IISD’s Best Practices Series analyses different approaches to the kinds of critical issues noted above. These bulletins are based on a review of a vast number of investment treaties and chapters in trade agreements, as well as case law interpreting treaty provisions.

The series provides both developing and developed country negotiators with state-of-the-art options and approaches to address the new issues and controversies in investment negotiations. By doing so, IISD hopes to the level the playing field in international investment negotiations and ensure access to the latest thinking and approaches by even the least developed countries with little endogenous capacity.

Some of the key issues where new treaty texts are showing interesting developments directly related to sustainable development are:

• the development of provisions preserving government policy space to protect the environment and the social development objectives of sustainable development;

• provisions defining the scope of rules on expropriation in relation to government regulations;

• statements on the scope of the fair and equitable treatment standard under investment law and its relation to new government measures for environmental protection and social development;

• new provisions on investor responsibilities that have begun to emerge (from complex models to simple statements on compliance with local laws);

• new institutional developments in regional agreements; and

• the scope and functioning of the Investor–State dispute settlement process under international investment agreements.

Publications

• Best Practices: Definition of Investor
  The paper looks at the criteria defining the range of protection granted to investors, and particularly at the role the nationality of an investor can play in investor-State arbitration. It also analyzes the issues that may arise in this regard, by taking into account the respective bilateral investment treaty (BIT) clauses and the interpretation provided by the international arbitration tribunals. In addition, the paper gives a set of recommendations regarding how to address issues such as dual nationality, and how to provide clear and predictable definitions when drafting the BIT chapters and clauses on investor protection.

• Best Practice: Indirect Expropriation
  The paper focuses on the definition of indirect expropriation in international investment law and aims to identify a set of criteria to overcome the existing issue of consistency and foreseeability while helping to provide a clear definition of the concept of indirect expropriation. It also looks at current practice in recent investment treaties and the criteria for identifying an indirect expropriation as derived from tribunal case law. Finally, the paper presents possible solutions to address the existing issues, through redrafting of clauses following some best practices in recent investment treaties, and the possibility of tribunals adapting their case law to the current challenges.

• The Full Protection and Security Standard Comes of Age: Yet another challenge for states in investment treaty arbitration?
  This paper traces the development of the full protection and security provision in international investment agreements. This provision has emerged as a potent tool for investor protection. The paper first identifies the common formulations of the standard as found in international investment treaties, then discusses the key arbitral rulings in relation to the standard. It concludes by identifying options for states in managing their exposure to liability under this standard.

• Transparency in the Dispute Settlement Process: Country best practices
  In many investor-state arbitrations, it is difficult or impossible even to know that the dispute has been initiated, what the issues and arguments are, and what decisions or awards have been made to resolve the matter. This lack of transparency is not something that the treaties require; rather, it is an outcome that arises because the treaties are often silent on issues of transparency and confidentiality in investor-state dispute settlement. Yet this is changing. Concern about the lack of public access to information regarding investor-state arbitrations has been mounting over roughly the past decade, tracking the rise of treaty-based investor-state arbitration itself. In response to those concerns, states have begun to take more direct control over the matter by inserting provisions on transparency directly in their treaties. This bulletin provides an overview of those practices, with a focus on individual agreements negotiated by Canada, the United States, Chile, Singapore, Australia and New Zealand, as well as regional arrangements, such as the North American Free Trade Agreement (NAFTA) and the investment agreement of the Common Market for Eastern and Southern Africa (COMESA), among others. It also reviews a number of selected model agreements. The aim is to illustrate the various approaches countries have increasingly adopted to incorporate transparency into the various stages of the dispute settlement process.

• Risks for Host States of the Entwining of Investment Treaty and Contract Claims: Dispute Resolution Clauses, Umbrella Clauses, and Forks-in-the-Road
  This paper is part of IISD's series entitled "The Best Practice Advisory Bulletin" which aims at making publicly available "best practice" analyses based on actual treaty texts, in order to provide developing and developed country negotiators with state-of-the-art options and approaches to address the new issues and controversies in investment negotiations.
  
  The Best Practice Advisory Bulletin aims to uncover the defects in IIA drafting that enable investors to forum-shop, to initiate multiple proceedings and to internationalize their contractual and administrative disputes. Second, it aims to show how IIA provisions can be simply drafted so as to minimize involuntary host state exposure to this triple threat. The Bulletin finds that the majority of IIAs surveyed utilize a very broad definition of "dispute" in their dispute resolution clauses, that they contain some form of umbrella clause and lack an effective fork-in-the-road clause. This leaves capital-importing States that are party to these IIAs highly exposed.

• Fair and Equitable Treatment
  This paper is part of IISD's series entitled "The Best Practice Advisory Bulletin" which aims at making publicly available "best practice" analyses based on actual treaty texts, in order to provide developing and developed country negotiators with state-of-the-art options and approaches to address the new issues and controversies in investment negotiations.
  
  This bulletin on Fair and Equitable Treatment (FET) examines the main approaches for defining fair and equitable treatment in international investment agreements (IIAs), and their implications for development policy space. It also identifies best practice approaches in recent IIAs for including FET. The rapid rise of investor-state arbitrations challenging state violations of IIAs has revealed the complexity behind the FET obligation. In fact, the FET standard has emerged as "the most relied upon and successful basis for a treaty claim" for investors.

• Definition of Investment in International Investment Agreements
  This paper is part of IISD’s series entitled “The Best Practice Advisory Bulletin” which aims at making publicly available “best practice” analyses based on actual treaty texts, in order to provide developing and developed country negotiators with state-of-the-art options and approaches to address the new issues and controversies in investment negotiations.
  
  This bulletin on the Definition of Investment examines the main options for defining investment in international investment agreements (IIAs), and their legal implications in view of evolving case law. It also discusses the best practices in recent treaties that allow host states to preserve development policy space in the definition of investment.