Since the early 1990s, countries across the globe have concluded investment treaties at a dizzying pace. In recent years the number of newly concluded bilateral investment treaties has been decreasing, but the share of free trade agreements with investment protection provisions has continued to grow, with several high-profile negotiations currently ongoing. IISD monitors the negotiation and conclusion of treaties as well as the revision of country's model agreements. It provides analyses of processes and content along the way and is actively engaged in addressing the sustainable development implications of the investor–state arbitrations that arise from this web of over 3,000 investment treaties.
The international investment framework consists today of a web of roughly 3,000 investment treaties, including bilateral investment treaties between two states, regional agreements, and investment protection provisions in free trade agreements between two or more countries. A key driver of these instruments has historically been the desire of developed, capital-exporting states to ensure that their nationals are financially and legally protected when investing in developing, capital-importing states. Consequently, the majority of investment treaties are between developed countries and developing countries or economies in transition, though this is slowly changing.
These treaties are not mere friendly diplomatic instruments, as some countries had first expected, but are actual treaties setting out hard legal obligations for the state hosting the investment and enforceable rights for the foreign investor.
The majority of the investment protection treaties still include potentially broad and vague standards, providing little legal certainty and allowing tribunals to interpret the standard in ways that significantly limit the governments’ regulatory powers.
IISD monitors the negotiation of investment treaties and the disputes initiated thereunder. As part of its capacity building activities
, it works with developing country governments to develop their policies on investment treaties in ways that fulfill their sustainable development goals and limit negative impacts of international investment treaties on governmental law and policy making. IISD also works with parliaments and civil society to foster and deepen their understanding of the investment treaty regimes.
- Side-by-side Comparison of the Brazil-Mozambique and Brazil-Angola Cooperation and Investment Facilitation Agreements
Martin Dietrich Brauch, 2015
Brazil has developed a new model investment agreement, the Cooperation and Investment Facilitation Agreement (CIFA). Unlike traditional bilateral investment treaties (BITs), which are geared towards investor protection, CIFAs focus less on investor protection and more on institutional arrangements and agendas for investment facilitation and cooperation. They promote amicable ways to settle disputes and propose state-state dispute settlement as a last resort. Notably, CIFAs do not include provisions on investor-state arbitration.
CIFA negotiations were launched in 2013. Between March and May 2015, Brazil concluded the first three agreements, with Mozambique, Angola and Mexico. Negotiations with Malawi are reported to have been concluded, and Brazil is also negotiating with Algeria, Chile, Colombia, Morocco, Peru, South Africa and Tunisia.
- Reply to the European Commission's Public Consultation on Investment Protection and Investor-to-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP)
Paper: Nathalie Bernasconi-Osterwalder, 2014
This IISD report replies to the European Commission's questions and statements related to the 90-day TTIP public consultation initiated by the Commission on March 27, 2014. The report seeks to inform the general public as well as European institutions about the legal implications of the proposed investment chapter text and the envisaged inclusion of investor-state dispute settlement (ISDS).
- A Response to the European Commission's December 2013 Document "Investment Provisions in the EU-Canada Free Trade Agreement (CETA)"
Paper: Nathalie Bernasconi-Osterwalder and Howard Mann, 2014
On December 3, 2013, the European Commission issued a document concerning the investment provisions in the EU-Canada free trade agreement (CETA) explaining how the CETA protects the right to regulate. In the present paper, IISD examines the assertions made by the European Commission against the actual text of the draft CETA Investment Chapter dated November 21, 2013 on the substantive provisions and the draft investor-state dispute settlement provisions as of February 4, 2014. In the end, we conclude that the actual draft legal texts in the public domain fail to meet a number of the European Commission's stated objectives
- The Canada-EU Comprehensive Economic and Trade Agreement: House of Commons submission
Paper: Howard Mann, 2013
Howard Mann, Associate & Senior International Law Advisor, testified to the Canadian House of Commons Standing Committee on International Trade, regarding the Canada-European Union Comprehensive Economic and Trade Agreement. His submission details his expert analysis and essential view that the draft agreement "will provide foreign investors into Canada with the most investor-friendly set of corporate rights ever drafted by the Canadian government into a treaty."
- The Canada-China investment treaty sleight of hand
Commentary: Howard Mann, 2013
Since 2005, Canada has prided itself on selling an advanced model of investment treaty to developing countries—one that, it has argued, protects their regulatory space while still protecting investors. Howard Mann argues that the new Canada-China Investment Treaty ends this model and explains what this means for Canada’s negotiating partners and for Canadians.
- The Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement: A Step Backwards for the EU and Canada? (June 2013)
In 2009, Canada and the EU started negotiating a Comprehensive Economic and Trade Agreement (CETA). Today, CETA negotiations, including the investment chapter, are at their final stage, and the conclusion of the agreement is expected this year. This brief article describes some important aspects of the May 31, 2013 draft chapter and comments on the potential implications should Canada and EU sign on to these provisions. The article also notes proposals that have been made by either the EU or Canada in the draft text—but where they have not yet agreed.
- Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) (May 2013)
This paper provides a comprehensive commentary and critique of the February 7, 2013 draft chapter of the Canada Comprehensive Economic and Trade Agreement (CETA).
- Reconceptualizing International Investment Law: Its role in sustainable development
Commentary: Howard Mann, 2013
This essay provides an overview of the evolution of international investment treaties since their origins in 1959. It focuses on the purposes, goals and rationales put forward for their development, and in particular their uptake by developing countries. In the face of growing criticisms and concerns about these treaties, the essay argues that the original purposes can no longer justify the overall regime and the risks it poses to sustainable development through its opaque processes and vague standards. Rather, the author argues that the purpose and rationale of the treaties must be shifted to fully encompass the central and critical relationship between FDI and sustainable development, particularly but not exclusively for developing countries. If this is done, options for reform are available. However, anything less than this type of paradigm shift cannot address the fundamental problems the regime faces as part of a modern public international component for globalization.
- The SADC MODEL BIT Template: Investment for Sustainable Development (2012)
The South African Development Community (SADC) Model Bilateral Investment Treaty Template and Commentary, intended as a guide for member states in future investment treaty negotiations, was completed in June 2012 by Member States of the Community. This brief note discusses the orientation of the template, the drafting process, the key features, and some brief conclusions.
- Analysis of the European Commission's Draft Text on Investor–State Dispute Settlement for EU Agreements (2012)
With the European Union's Lisbon Treaty, in force since December 2009, foreign direct investment fell under the exclusive competence of the European Union (EU). Since then the three European institutions—the European Commission, the European Council of Ministers and the European Parliament—have been engaged in a vigorous debate over a new legal framework and negotiating positions for the negotiation of investment treaties by the EU. As part of this process, in May 2012 the Directorate-General for Trade of the European Commission issued a first draft text on investor–state dispute settlement in EU investment treaties. This note provides an overview and assessment of some of the proposed changes, before examining in more detail three issues of interest: the Commission's proposed approach to transparency in investor–state dispute settlement, the constitution of tribunals, and the implementation and enforcement of awards.
- Best Practices Series
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. Some of the key issues addressed in 2012 include compensation for expropriation, registration and approval requirements, the definition of investor, and indirect expropriation. In previous years, the series dealt with the full protection and security standard, transparency, investment treaty and contract claims, fair and equitable treatment and the definition of investment.
- Investment Treaties and Why They Matter to Sustainable Development: Questions and Answers (2011)
This handbook gives answers to frequently asked questions on international treaties that guarantee standards of treatment and protection for foreign investors. Developments over the past two decades have shown these treaties to be powerful instruments that play a large role in defining the relationship between host states and foreign investors. However, in their current form, they do little to promote sustainable development. Among other things, the handbook explores whether investment treaties have been effective in increasing foreign investment, how the fair and equitable treatment obligation relates to government policy space and sustainable development, and how states can fix past mistakes in investment treaties.
- Commentary to the Austrian Model Investment Treaty (2011)
The commentary examines the Austrian Model Bilateral Investment Treaty (BIT) adopted in 2008 and compares recent developments in the use of BIT models in North America and Europe. Among other aspects, this paper focuses, on the Austrian Model BIT's scope, definitions of “investment” and “investor,” umbrella and dispute settlement clauses, host country obligations, most favoured nation (MFN) and national treatment and obligations. Further topics include market access, expropriation and fair and equitable treatment (FET) provisions. Specific attention is given to BIT provisions addressing labour, sustainable development, and the environment, and to the issue of transparency in investor–state dispute settlement. The paper commends the efforts to modernize the Austrian approach to international investment treaty negotiations, but also points out some still-existing key areas of concern and recommends ways to address problems in the nearly 70 existing treaties already concluded by Austria.
- European Parliament hearing on Foreign Direct Investment (2010)
Providing expert opinion on the future direction of the EU's international investment policy arising from its new competence over foreign direct investment, Nathalie Bernasconi-Osterwalder looks at some of the trends in the area of investment protection and dispute settlement, and at the investment treaty arbitrations Europe is facing. She identifies some of the main challenges that have become apparent in the area of investment protection and examines issues that have arisen in relation to the substantive rules contained in investment treaties and investor–state dispute settlement mechanisms. Drawing on the experience of countries like the U.S. and Canada, Bernasconi-Osterwalder outlines ways in which some of the main problems could be addressed in the European context.
- Belgium's Model Bilateral Investment Treaty: A Review (2010)
The paper gives a background on developments in the substantial content of International Investment Agreements (IIAs) and most notably Bilateral Investment Treaties (BITs) since the conclusion of the first BIT in 1959. It presents an overview of the Belgian BITs and their specifics, and examines the scope of the 2002 Belgian Model BIT. A particular focus is placed on topics such as host country, home state and investor obligations, and on the provisions specifically addressing the environment, labour, and sustainable development. The paper contains a set of recommendations to help address the limitations of the current Belgian Model BIT.
- Time for a Change—Germany's Bilateral Investment Treaty Programme and Development Policy (2006)
Mahnaz Malik, Associate IISD, analyzes the German BITs against the backdrop of the linkage between investment and sustainable development. The research appears as Friedrich Ebert Stiftung (FES) Occasional Paper 27, November 2006. The paper was presented at a meeting organized by FES in Berlin in December 2006.