Analysis

In Accordance with Which Host State Laws? Restoring the ‘Defence’ of Investor Illegality in Investment Arbitration

Investment treaties are often criticised for being too ‘investor-friendly.’ With this in mind, it becomes important to clarify the mechanisms available to host states to defend against investment treaty claims. One such mechanism is found in the provisions included in many investment treaties, to the effect that investors must comply with host state law in order for their investment to enjoy treaty protection.

Litigating Intellectual Property Rights in Investor-State Arbitration: From Plain Packaging to Patent Revocation

Enforcing intellectual property (IP) rights abroad is a difficult enterprise. International IP treaties have generally not created global, directly enforceable IP rights. Usually, the protection they confer cannot even be directly invoked in front of national courts. Rather, because of the territorial nature of IP protection, right holders must enforce their rights in local courts based on local laws. Litigating one’s IP rights abroad hence faces significant hurdles.

However, international investment law may offer some options to overcome these hurdles.

Who is Afraid of Investor-State Arbitration? Unpacking the Riddle of ‘No Greater Rights’ in the TTIP

The Trans-Atlantic Trade and Investment Partnership (TTIP) has been creating expectations and stirring fears ever since it was announced by EU Commission President José Manuel Barroso and US President Barack Obama in mid-2013.[1] The promise to boost trans-Atlantic economic exchange in the world’s largest free-trade area came along with the aim to “include investment … […]

Risky Business or Risky Politics: What Explains Investor-State Disputes?

While there is a fair amount of scholarly work on the determinants of expropriation, we know less about the political and economic conditions under which the broader category of investor-state disputes take place. This article provides a statistical analysis of political and economic factors that contribute to the likelihood of an investor-state dispute; and a qualitative coding of measures which have resulted in arbitration cases.

Opening the Door to Foreign Investment? An Analysis of Bolivia’s New Investment Promotion Law

On April 4, 2014, Bolivian President Evo Morales promulgated a law establishing the general legal and institutional framework to promote domestic and foreign investment in Bolivia, while contributing to socio-economic development. This note provides an overview and analysis of the main features of Bolivia’s new law, within the context of the country’s investment law and policy, and international trends.

Aron Broches and the Withdrawal of Unilateral Offers of Consent to Investor-State Arbitration

Several States have terminated bilateral investment treaties as they came up for renewal. The effectiveness of BIT termination, however, is limited by the “survival clauses” that are frequently included in IIAs. These provisions state that even after the treaty is terminated it will continue to apply to investments that were made while the treaty was in force for an additional 10 or 15 years.

Importing Consent to ICSID Arbitration? A Critical Appraisal of Garanti Koza v. Turkmenistan

This brief article provides a critical examination of the tribunal’s decision in Garanti Koza LLP v. Turkmenistan, where the majority took a particularly expansive reading of the MFN clause in the United Kingdom-Turkmenistan BIT.

ICSID’s Annulment Decision in Impregilo v. Argentina: Finality of Awards v. Legal Correctness

On January 24, 2014, an ICSID ad-hoc annulment committee dismissed a request by the Argentine Republic to annul a June 2011 arbitral award for harm suffered to an investment in a Buenos Aires water services concession. While this was one of the smaller awards rendered against Argentina, it is nonetheless of utmost significance for Argentina and all countries facing claims under investment treaties.

Improving Investment Treaties through General Exceptions Provisions: The Australian Example

The recent Australian elections were decided mostly by domestic policy issues, but their outcome had an impact beyond the border as the new government decided to rethink Australia’s somewhat unique view on the international investment regime. In changing course, has the Australian government simply joined the rest of the world?

Foreign Investment in Farmland and Water: 10 Steps for Better Contracts

The International Institute for Sustainable Development studied seventy contracts between states and foreign investors involving long-term leases of farmland. We have come up with our own model contract that we believe answers many of these concerns.

The Practice of Responsible Investment Principles in Larger-Scale Agricultural Investments

The recent and ongoing trend towards corporate, especially foreign, investment in developing countries’ agricultural sectors has evoked sharply contrasting attitudes. For some, this “rediscovery” of agriculture as a focus of investment provides opportunities to again promote the sector within the larger agenda of economic development. For others, it has raised serious concerns about whether such investments, especially those involving large scale land acquisitions, are conducted in a manner which respects people’s rights, livelihoods and resources.

The Boom in Parallel Claims in Investment Treaty Arbitration

Investment treaty arbitrators have adopted a de facto policy of favouring parallel claims by declining to yield to contractually-agreed dispute settlement provisions. The policy is widespread among tribunals but appears out of step with judicial restraint based on principles of party autonomy, sanctity of contract, or the avoidance of parallel proceedings.

Proposed Changes to the Investment Dispute-Resolution System: A South American Perspective

The system of international investment arbitration suffers from serious flaws. In South America, more than other regions, these failings are apparent from direct experience. Perhaps because so many countries in the region have faced multiple international investment arbitrations based on multi-million dollar claims for compensations, a number of alternatives to the current system of investment dispute resolution have been proposed by governments, multilateral institutions and academics.

State Liability for Regulatory Change: How International Investment Rules are Overriding Domestic Law

With governments around the world pushing efforts to negotiate and approve mega-investment treaties, it is important to be clear on just what these investment treaties do and do not mean. This article compares U.S. domestic law and international treaty rules on state liability for regulatory changes. It shows that arbitral tribunals have interpreted investment treaty rules in a manner far more favorable to the interests of investors than the approaches adopted in U.S. courts.

Online Statements by National Investment Boards or Agencies and Their Potential Legal Effects

National investment boards or agencies operate in several countries with a view to attract foreign investment. Towards this objective, they often maintain websites highlighting the advantages of investing in their country. This article surveys some common categories of representations and promises made on the websites of national investment boards and discusses their potential legal implications.

Conoco-Phillips and Exxon-Mobil v. Venezuela: Using Investment Arbitration to Rewrite a Contract

Arbitrations by ConocoPhillips and ExxonMobil against Venezuela feature some of the largest claims ever to have been brought against a state by international investors. However, a careful reading of dispute’s factual background suggests that these claims bear little connection with the deals that these oil firms actually agreed to in Venezuela.

Threat of Pharmaceutical-Related IP Investment Rights in the Trans-Pacific Partnership Agreement: An Eli Lilly v. Canada Case Study

There are many reasons to strike the draft TPP Investment Chapter, a chapter that restricts government sovereignty to regulate business activities while simultaneously ceding de facto regulatory power to foreign investors and private arbitrators. The Eli Lilly claim against clarifies the risks of including IP rights in investment chapters and the boundary-pushing claims that can be brought on behalf of foreign pharmaceutical companies.

New UNCITRAL Arbitration Rules on Transparency: Application, Content and Next Steps

In July 2013, the United Nations Commission on International Trade Law (UNCITRAL) adopted a package of rules aiming to ensure transparency in investor-State arbitration, ratifying the work done by delegations to UNCITRAL—comprised of 55 Member States, additional observer States and observer organizations—over the course of nearly three years of negotiations. With the adoption of the new rules, there is now a carefully negotiated and widely approved template that can serve as a model for how to conduct investor-State arbitrations transparently.

The Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement: A Step Backwards for the EU and Canada?

This brief article describes some important aspects of the draft investment chapter of the Canada-EU CETA, as well as commentary on the potential implications should Canada and EU sign on to these provisions.

The Evolving BIT: A Commentary on Canada’s Model Agreement

While the revision that gave birth to the United States’ Model bilateral investment treaty in April 2012 has been closely observed and commented upon, much less attention has been paid to changes made to the Canadian Model BIT.

Investment Treaties and the Search for Market Access in China

The inclusion of market access commitments in investment agreements has proven divisive. This article looks at where China stannds on this issue.

The Quest for Commodities: Chinese Investment in Farmland

China is often singled out as one of the big ‘land grabbers’, although it strongly refutes these claims. We set out to verify whether reports about Chinese investments were accurate or not.

Smart Flexibility Clauses in International Investment Agreements

A major challenge for investment treaty designers and adjudicators is to separate opportunistic behavior by host states that should be sanctioned under international law from bona fide public policy measures that should not. This article suggests that International Investment Agreements need to be both ‘smarter’ and more ‘flexible’ to better make that distinction. It draws on economic contract theory as a basic framework, and political economy theory for fine-tuning.

Enabling Risky Business: Human Rights and the Role of Officially Supported Trade Finance and Investment Guarantees

The expanded role played by Export Credit Agencies (ECAs) since the global financial crisis has not been matched with stronger rules that address the human rights-related impacts of ECA financed projects. Given narrow set of regulations that currently apply to ECAs, this brief article argues that more needs to be done to ensure that ECA financed projects do not cause harm to home states.

How to Incorporate Human Rights Obligations in Bilateral Investment Treaties?

Very few BITs refer directly to human rights issues. However, when they do, they clearly do not impose any binding obligations on foreign corporations. The following paragraphs will provide a concrete analysis of how BITs could be drafted (or redrafted) to incorporate non-investment obligations.

Remedies in Investor-State Arbitration: A Public Interest Perspective

While an extensive body of literature maps the tensions between regulatory sovereignty and investor protection in international investment law and analyses the balancing of private and public interests in arbitral practice, only a small sub-set of this literature makes reference to public interest considerations at the remedies stage of the investor-state arbitration process.

Land Grab v Food Security: Can Global Regulation Cope?

Agro-FDI is a two-edge sword: only when managed properly will it bring food security benefits. However, the current global governance structure for agro-FDI unevenly distributes rights and obligations between the host state, the investor and the investor’s home state.

A Distinction Without a Difference? The Interpretation of Fair and Equitable Treatment Under Customary International Law by Investment Tribunals

Broad interpretations of the standard for fair and equitable treatment (FET) by investment tribunals have become a source of increasing controversy. In theory, linking FET to customary international law (CIL), which is formed through the “general and consistent practice of states” that they follow out of a sense of legal obligation (opinio juris), results in a standard of protection that is more deferential to the regulatory authority of governments than the “autonomous” standard. In practice, however, investment tribunals continue to construe even CIL-based FET provisions to impose broad limits on government authority by accepting, without any evidence of state practice or opinio juris, the pronouncements of previous tribunals as definitive evidence of the standard under CIL.

Counterclaims by States in Investment Arbitration

It is quite common in investment arbitration for the respondent State to include in its defense to treaty claims one or more criticisms of the investor’s underlying conduct. Yet while such arguments feature prominently in State defenses, they are rarely framed as counterclaims seeking affirmative relief. The reason may lie in an instinctive preference by States to pursue any affirmative claims in their own courts. But it may also lie in perceived limits to the jurisdiction of international tribunals to hear State counterclaims.

Two recent ICSID decisions have reached entirely different conclusions on the issue of jurisdiction over State counterclaims. This essay touches briefly on certain jurisprudential and policy factors that may explain the divergent results and frame future cases for further analysis.

The IMF’s New Transfers Policy and the Trading System

In late 2012, the International Monetary Fund (IMF) officially endorsed an “institutional view” on the management of capital flows. This short note provides an overview of the new IMF view, pinpoints how it may conflict with country obligations under trade and investment treaties, and discusses remedies for reform.

UNCTAD’s Investment Policy Framework for Sustainable Development: Potential and Issues

The United Nations Conference on Trade and Development (UNCTAD) has released its Investment Policy Framework for Sustainable Development (IPFSD). This article engages in an independent assessment of the IPFSD.

The Sixth Annual Forum of Developing Country Investment Negotiators: Understanding and Harnessing the New Models for Investment and Sustainable Development

The Sixth Annual Forum of Developing Country Investment Negotiators was held on October 29-31, 2012, in Port of Spain, Trinidad and Tobago. The forum encourages participants to develop their own critical perspectives on issues which are germane to the negotiation of international investment treaties.

Integrating Sustainable Development into International Investment Agreements: A Commonwealth Guide for Developing Country Negotiators

In November 2012 the Commonwealth Secretariat completed a practical guide, titled “Integrating Sustainable Development into International Investment Agreements: A Guide for Developing Countries,” to help enable developing countries to design international investment agreements that support their development needs.

Peru’s State Coordination and Response System for International Investment Disputes

Just as Peru has joined the global trend of concluding investment protection agreements, the country has also been no stranger to the considerable increase in international investment disputes observed in recent years. To address this growth in international investment arbitration in line with its investment attraction policy, Peru has created a system for efficiently and effectively resolving potential disputes.

The SADC MODEL BIT Template: Investment for Sustainable Development

The South African Development Community (SADC) Model Bilateral Investment Treaty Template and Commentary was completed in June 2012 by Member States of the Community. Its completion marks the end of an 18 month process of consultations and drafting among government representatives and is intended as a guide for member states in future investment treaty negotiations.

Towards a New Generation of Investment Policies: UNCTAD’s Investment Policy Framework for Sustainable Development

On 12 June 2012, the United Nations Conference on Trade and Development launched its Investment Policy Framework for Sustainable Development. IPFSD comes at a time when the international investment regime is in a state of “transition” and when an increasing number of governments are reviewing their investment-related regulatory frameworks, both at the national and international levels.

Dealing With the Increasing Complexity of Investment-Related Treaties: A Framework and Some Policy Guidelines

Bilateral investment treaties used to be boilerplate: taken out of a drawer before official visits; signed with pomp and circumstance but not much attention to precise wording. Today, the diversity and ramifications of investment-related treaties are staggering.

Inching Towards Consensus: An Update on the UNCITRAL Transparency Negotiations

From October 1-5, 2012, a working group of the United Nations Commission on International Trade Law met in Vienna to continue work on how to ensure transparency in treaty-based investor-state arbitration. It was the working group’s fifth week-long meeting on the topic, but will not be the last.

Consent to Arbitration Through National Investment Legislation

National investment codes[1] may function as potential sources of international investment law. In other words, states may make unilateral undertakings within the framework of national investment legislations and, as a result, be considered as having “created international obligation[s]”.[2] The addressees of national investment legislations are foreign investors as well as the state that is itself […]

Analysis of the European Commission’s Draft Text on Investor-State Dispute Settlement for EU Agreements

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 […]

The Source for Determining Standards of Review in International Investment Law

After several cases assessing whether state regulation in the public interest gives rise to a claim under an investment treaty, commentators have begun asking questions about the applicable standard of review that should be applied in evaluating those claims. Now that there is emerging clarity around the interpretation of the most common substantive investment treaty […]

Investment Law and Public Services: Clashes of Interests or Peaceful Coexistence?

[T]he Tribunal must balance the legitimate and reasonable expectations of the Claimants with […] [the] right to regulate the provision of a vital public service.[1] This quote from an investment arbitration tribunal highlights the relationship between international investment law and the regulation of public services. This essay illustrates areas of contention between the requirements of […]

Deference or No Deference, That is the Question: Legitimacy and Standards of Review in Investor-State Arbitration

The appropriate standard of review to be applied in investor-state arbitration—as well as in other dispute settlement contexts, for that matter—remains a recurrent and much debated topic.[1] The reason is straightforward: In many cases, the outcome of arbitral proceedings hinges, inter alia, on the intensity with which a tribunal scrutinizes the conduct of the investment’s […]

Pro-Investor or Pro-State Bias in Investment-Treaty Arbitration? Forthcoming Study Gives Cause for Concern

Debates about investment treaties often raise questions about fairness and independence in international investment arbitration. Some observers argue that investment arbitration offers a neutral and impartial forum in which to resolve investor-state disputes as a basis for protecting foreign-owned assets and ensuring the rule of law.[1] Others claim that the arbitration mechanism favours investors and […]

Venezuela’s Withdrawal From ICSID: What it Does and Does Not Achieve

In January 2012, the Bolivarian Republic of Venezuela denounced the ICSID Convention,[1] becoming the third country – after Bolivia and Ecuador – to do so. The exit from the global forum for the settlement of investment disputes signals these countries’ apparent loss of faith in the system and raises questions about the Convention’s fitness for […]

The White Industries Arbitration: Implications for India’s Investment Treaty Program

In November 2011, an arbitral tribunal found the Republic of India guilty of violating the India-Australia bilateral investment treaty (BIT). It is the first known investment-treaty ruling against India, despite the fact that the country has a mammoth portfolio of BITs with more than 70 countries. News of the award broke only in February 2012.[i] […]

Defining an ICSID Investment: Why Economic Development Should be the Core Element

A dispute will only fall within the jurisdiction of the International Centre for Settlement of Investment Disputes (ICSID) if it directly arises out of an ‘investment’, as is provided by Article 25(1) of the Convention for the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). However, not only does the ICSID Convention fail to provide any definition of what constitutes an ‘investment’, the drafters of the ICSID Convention, in fact, made an express decision not to include such a definition. This absence has given rise to interesting issues of interpretation as ICSID tribunals have sought to arrive at an understanding of how the term ‘investment’ should be properly understood for the purposes of the ICSID Convention.

Mission Creep: International Investment Agreements and Sovereign Debt Restructuring

As members of the Eurozone are now acutely aware, the lack of a sovereign debt restructuring regime is one of the most glaring gaps in the international financial architecture. That said, this summer’s decision by a tribunal of the International Centre for Settlement of Investment Disputes (ICSID), which grants a bilateral investment treaty (BIT) jurisdiction […]

Investment Developments in the Trans-Pacific Partnership Agreement

Advocates for the Trans-Pacific Partnership Agreement (TPPA) describe it as a “new generation agreement for the 21st century” that will go further behind the border than any previous free trade agreement (FTA). This signals significant changes in the investment regime found in the current generation of FTAs and bilateral investment treaties (BITs). Precisely what those […]