Brazil’s Cooperation and Facilitation Investment Agreements (CFIA) and Recent Developments

1. Introduction

None of the 2.369 bilateral investment treaties (BITs) in force involves Brazil.[1] Although Brazil signed 14 traditional BITs between 1994 and 1999,[2] they were never approved by the country’s National Congress, which saw the investor–state arbitration regime as limiting states’ right to regulate and as granting extraordinary benefits to foreign investors, hence discriminating against domestic investors. For the same reasons, Brazil did not sign the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). Even so, it continued to receive significant amounts of foreign direct investment (FDI), consolidating its position as one of the world’s top recipients of FDI[3] and reinforcing the understanding that having BITs in force is not decisive for attracting investments.

The increasing internationalization of Brazilian enterprises,[4] the interest of partner countries in negotiating investment agreements, the several problems perceived in traditional BITs and the growing number of investor–state arbitration cases raised the debate of investment agreements again in Brazil. This consisted in an opportunity to develop an innovative model that did not focus only on protection of investors and investments, but which aimed at promoting and facilitating productive investment of high quality. The Brazilian government thus adopted a new approach: the Cooperation and Facilitation Investment Agreement (CFIA).[5] This article discusses the problems of traditional investment treaties, the main features of the CFIAs and recent developments in negotiations.

2. Problems of the traditional model of investment agreements

The traditional model of investment agreement, establishing strong protection clauses for foreign investors and allowing them to initiate international arbitration against the host state without prior recourse to the local judiciary, has had negative effects on host countries. Among several other criticisms, their provisions were excessively burdensome for capital-importing states, particularly when the specific needs of developing countries are considered. Many clauses have been interpreted in a way that limits or prevents states’ right to regulate, restricting the implementation of legitimate public policies.

Indirect expropriation clauses, for example, have allowed foreign investors to challenge legitimate public policies aimed at protecting the environment or human health before arbitral tribunals. This happened, for instance, in the cases initiated by Philip Morris against Uruguay and Australia,[6] in which the tobacco company challenged the labelling regulations established by these countries to reduce the attractiveness of cigarette packs and thus limit the consumption of the product.

Many of the 767 investor–state arbitration cases known to date[7] have had major political repercussions in the countries involved. Investment tribunals have awarded large amounts of compensation and are often perceived as favouring individual business interests over social and public considerations of the host state.

With a focus on the dispute settlement mechanism and with a structure that stimulates challenges to domestic regulations that somehow affect investments, BITs have created an adversarial dynamic, which does not contribute to create a good business environment nor long-term investor–state relations. Despite often having the name “Agreements for the Promotion and Protection of Investments,” these traditional texts do not have an actual promotion concern,[8] but almost exclusively the protection one, and their effectiveness in promoting investments has not been confirmed, after all these years, by any available data.[9]

Developing and developed countries alike have started to think of reforming the international investment agreements regime and to promote changes in their investment treaty models, including clauses aimed at clarifying and delimiting states’ obligations toward investors and limiting the possibilities of initiating arbitration. Even so, many concepts used for that purpose maintain large room for interpretation by arbitrators and do not solve the problem.

Different countries have adopted various strategies. Bolivia and Ecuador have terminated many of their BITs. India is currently renegotiating or withdrawing from its BITs. Australia has moved away from investor–state arbitration in its agreements. South Africa has turned to domestic mediation for the settlement of investor–state disputes. The United States has made some changes to its model BIT. In the European Union, the opposition of the European Parliament and civil society to the classic investor–state arbitration mechanism led the European Commission to propose the creation of a reformed system with a standing first-instance tribunal and an appellate mechanism.

3. The Cooperation and Facilitation Investment Agreement model

Brazil’s response to the criticisms of the current regime was to move away from the adversarial approach and to adopt a cooperative approach, focusing on the elements of mutual benefit to investors and states. It sought to avoid the problems of traditional agreements and look for a model that really aimed at promoting investment, and not just protecting it.

With that in mind, a governmental team led by the Ministries of Finance (MF), Foreign Relations (MRE) and Industry and Foreign Trade (MDIC), in consultations with other institutions and private sector coalitions, developed the CFIA model. The creation of this model also took into account debates and studies of international organizations and economic forums such as the Organisation for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), the International Institute for Sustainable Development (IISD) and the G20, besides valuable benchmarks on the theme and country examples.

The premise of the CFIAs is the long-term perspective that states need to cooperate and maintain fluent and organized dialogue with investors to foster sustained investments. It is a new concept of agreement focused on stimulating and supporting mutual investments (adopting the concept of investment facilitation), aiming at boosting reciprocal investment flows and opening new and sustainable integration activities between the states. The model is therefore in line with the development agendas at the G20 and other international forums, especially with the more recent discussions on investment facilitation—which have benefited a lot from the Brazilian model agreement as an example—as it fosters the improvement of investment conditions to amplify business opportunities and stimulate private sector investments.

The CFIA model is composed of four main substantive parts, discussed in detail as follows.

a. Scope of the agreement and definitions

The definition of investment plays an essential role, since the CFIAs cover only FDI, which is the kind of investment seen as able to play a more decisive role in the development of the states. Portfolio investments are explicitly excluded from the scope of the CFIAs, since they encompass essentially short-term and speculative investment.

b. Regulatory measures and risk mitigation

The national treatment and most-favoured-nation (MFN) treatment clauses establish that foreign investors must be treated no less favourably than domestic investors or investors from third parties. A few existing exceptions are preserved, such as the prohibition of investments in border regions. The model does not limit new public policy measures, if they are not discriminatory. There also are articles on transparency, on the freedom of investment-related transfers, and an article about expropriation, which determines that direct expropriations are not allowed, unless they are made in the public interest, in a non-discriminatory way, in accordance with due process of law and on payment of effective compensation. The expropriation article does not cover indirect expropriation.

An important innovation in relation to other investment agreement models is the introduction of clauses on corporate social responsibility based on the OECD Guidelines for Multinational Enterprises,[10] provisions against corruption and, in the most recent negotiations, specific exceptions for the protection of human, animal and plant life. This is in line with Brazil’s wish that investments be socially responsible and contribute to sustainable development.

c. Institutional governance and dispute prevention and settlement

Under the CFIAs, each partner state must create a centralized mechanism (Ombudsman or Focal Point) to receive investors’ queries and demands. The Ombudsman analyzes the demands and questions posed and, coordinating with the governmental entities related to the issue through expedited proceedings, provides the investor with an answer or solution. The objective is that foreign investors have at their disposal effective means to overcome hardships and challenges faced to make and maintain the investment and to foster a good business environment. Brazil’s Ombudsman was established within the Chamber of Foreign Trade (CAMEX), an inter-ministerial body responsible for formulating, adopting and coordinating trade and investment policies.

The CFIAs also innovate through the constitution of a Joint Committee for state–state cooperation and dispute prevention. The dispute prevention component works through a mechanism in which representatives of the investors and governments involved can share their views on the issue raised by the investors and look for a solution on a common ground.

If the parties fail to find a common ground, the states involved can initiate international arbitration as a last resort. The CFIAs do not provide for investor–state arbitration. The main purpose of the state–state arbitration is to determine whether the host state violated any of the disciplines of the agreement and, if so, recommend that the state adjust or eliminate its nonconforming measure.

d. Agenda for Further Investment Cooperation and Facilitation

The cooperation aspect of the Joint Committee’s attributions is exercised especially through the development of the Agenda for Further Cooperation and Facilitation, which can include themes such as business visa facilitation, exchange of legislation information and logistics. These topics move forward depending on the common interest of the partner states. Therefore, the agenda is intended to be a living document, which can be adapted to each case, including topics of mutual interest.

4. Recent developments

In 2013 CAMEX issued a mandate for the negotiation of agreements with African countries, based on the guidelines of the newly developed CFIA model. This mandate was expanded in 2015, right after the conclusion of the first agreements with Angola, Malawi and Mozambique, to include all countries interested in negotiating agreements under the CFIA model with Brazil.

Brazil has also signed CFIAs with Chile, Colombia, Mexico and Peru, and has concluded negotiations with India and Jordan. Negotiations based on a 2015 proposal by Brazil have recently been concluded by the MERCOSUR Working Subgroup on Investments (SGT 12), with the signing of the Cooperation and Facilitation Investment Protocol to the Treaty of Asunción on April 7, 2017.

At the time of writing, the CFIAs with Mexico and Peru have just been approved by the Brazilian Senate, becoming the first investment agreements to obtain congressional approval in Brazil. The other CFIAs signed by Brazil are still undergoing the approval process. The Ombudsman for Direct Investment and a National Committee on Investment were established in September 2016 within the structure of CAMEX, including regulations for both institutional frameworks.[11]

Even if the name or the structure of the agreements may vary slightly, their main features are the same and based on the CFIA model. The small changes indicate adjustments to the specific needs of each partner and the possibility to continually improve the model without losing its essence.

The investment cooperation and facilitation frameworks of the CFIAs (including the Ombudsmen, the Joint Committees and the flexible Agendas for Further Investment Cooperation and Facilitation) have drawn the attention of relevant international organizations. Almost all the action lines included in UNCTAD’s Global Action Menu for Investment Facilitation[12] are also present in the Brazilian model. Furthermore, the IISD-led draft South–South Principles on International Investment for Sustainable Development[13]—still undergoing a drafting process with states—and the OECD Secretariat paper on investment facilitation are in line with many of the ideas included in the Brazilian model. The CFIA model was also echoed in G20 debates on the need to foster investments, which gained force with the Seoul Summit (2010), the creation of the Trade and Investment Working Group (TIWG) and the approval of the G20 Guiding Principles for Global Investment Policymaking.[14]

5. Conclusion

The problems perceived in the traditional model of agreements led to Brazil’s decision to remain outside the logic of simply creating extraordinary conditions for foreign investors through an adversarial approach. Ultimately, they led Brazil to develop the CFIA model to redefine, on a more balanced basis, what it is expected of an investment agreement. The CFIA model fosters a cooperative approach, focusing on investments facilitation and dispute prevention for a more productive business environment.

While the success of the CFIA model in terms of generating more investments and fewer disputes cannot yet be tested, the new institutional framework—established due to the CFIA—has already improved and organized the investment policy decision-making process and provided Brazil with a better system for diagnosis and analysis of the domestic regulatory scenario. The approval of the agreements with Mexico and Peru and the positive repercussion of the model among relevant economic agents and partners, as well as in the international academic and cooperation circles, show that the model seems to be heading in the right way.


José Henrique Vieira Martins is General Coordinator for Trade and Investment Policy of the Ministry of Finance of Brazil and National Coordinator of Brazil at the MERCOSUR Working Subgroup on Investments (SGT 12).

The views expressed in this article are those of the author’s and do not necessarily reflect the views of the Brazilian Ministry of Finance or the Brazilian Government.


[1] United Nations Conference on Trade and Development (UNCTAD). (2017). International investment agreements navigator. Retrieved from

[2] Id. Retrieved from

[3] UNCTAD. (2016). World investment report 2016: Investor nationality: Policy challenges, p. 5. Retrieved from

[4] By the end of 2014, the stock of Brazilian FDI abroad corresponded to half the amount of FDI stock in Brazil. Brazilian Central Bank. (2014). Brazilian capital abroad. Retrieved from

[5] See Bernasconi-Osterwalder, N., & Brauch, M. D. (2015, September). Comparative commentary to Brazil’s cooperation and investment facilitation agreements (CIFAs) with Mozambique, Angola, Mexico, and Malawi. Retrieved from; and Morosini, F., & Sanchez Badin, M. R. (2015, August). The Brazilian agreement on cooperation and facilitation of investments (ACFI): A new formula for international investment agreements? Investment Treaty News, 6(3), 3–5. Retrieved from

[6] Philip Morris Asia Limited v. The Commonwealth of Australia, UNCITRAL, PCA Case No. 2012-12. Retrieved from; Philip Morris Brand Sàrl (Switzerland), Philip Morris Products S.A. (Switzerland) and Abal Hermanos S.A. (Uruguay) v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7. Retrieved from

[7] UNCTAD. (2017). Investment dispute settlement navigator. Retrieved from

[8] Only 19 per cent of 500 BITs analyzed by UNCTAD included investment promotion provisions. UNCTAD. (2008). Investment promotion provisions in international investment agreements. Retrieved from

[9] Salacuse, J. W., &. Sullivan, N. P. (2005). Do BITs really work? An evaluation of bilateral investment treaties and their grand bargain. Harvard International Law Journal, 46(1), 67–130.

[10] Organisation for Economic Co-operation and Development (OECD). (2011). OECD guidelines for multinational enterprises. Retrieved from

[11] Federative Republic of Brazil. (2016). Decree No. 8863/2016. Retrieved from

[12] UNCTAD. (2016, May 31). UNCTAD’s global action menu for investment facilitation. Retrieved from

[13] International Institute for Sustainable Development (IISD). (2016). High-level roundtable discussion on the development of South–South principles on international investment for sustainable development, Nairobi, Kenya, July 18, 2016: Meeting report. Retrieved from

[14] G20. (2016). Trade ministers meeting statement, 9–10 July 2016, Shanghai, Annex III. Retrieved from