Since we last reported on the process, there have been two virtual negotiation rounds on ECT modernization, taking place in the midst of increased civil society opposition to the agreement, particularly within the EU.
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As we reported, UNCITRAL WGIII on ISDS reform held its 40th session in May 2021, at which time delegates discussed a draft work and resourcing plan.
Twelve years after it denounced the agreement, Ecuador has again ratified the ICSID Convention. The agreement came back into force on September 3, following the deposit of the instrument of ratification with the World Bank on August 21.
The prime minister of Spain, Pedro Sánchez, and the president of Colombia, Iván Duque Márquez, signed a new BIT on September 16, 2021. Both countries sought to modernize the previous treaty, which had come into force in 2005.
The government of Pakistan has reportedly resolved to terminate 23 of the country’s 48 BITs that have completed their initial duration. Additionally, the country will not ratify 16 BITs that have been signed but have yet to enter into force.
On July 27, 2021, the UN Working Group on Business and Human Rights published its 2021 Report on Human Rights-Compatible IIAs.
WTO members involved in the “structured discussions” on investment facilitation met on several occasions during the first quarter of 2021. These meetings culminated with the circulation of the “Easter Text,” an important milestone in the talks that brings together several earlier drafts and texts in one document. This text will serve as the main basis for drafting any ultimate agreement on investment facilitation.
The UNCITRAL WGIII convened, with delegates able to attend virtually or in-person, from May 4–5, 2021 for the resumption of its 40th session. On the agenda was consideration of the draft work and resourcing plan.
On May 20, 2021, the European Parliament voted to suspend ratification efforts of the “in principle” Comprehensive Agreement on Investment (CAI) with China.
As we reported, German-owned energy company Uniper put the Netherlands on notice of an investment dispute last year, following the announcement of the country’s plan to phase out coal-burning power plants by 2030. Alongside RWE, another German energy company, Uniper made good on that threat earlier this year; both companies initiated ICSID claims lodged under the ECT this spring.
On May 13, 2021, Canada announced that it had finalized its 2021 Model Foreign Investment Promotion and Protection Agreement (FIPA), which will replace the 2014 version. According to Global Affairs Canada, the agreement is the result of “extensive public consultations initiated in 2018 with a broad range of stakeholders, including from civil society and labour unions, legal experts, representatives of all sizes of Canadian business, representatives of provinces and territories, and Indigenous partners.”
Following three negotiation rounds on ECT modernization last year, the most recent of which concluded on November 6, 2020, a leaked progress report from December 2020 suggests that state parties are still divided on key issues. This makes progress in negotiations, which require consensus from the national delegations, difficult to come by.
On December 30, 2020, after seven years of discussion, Brussels and Beijing announced the conclusion of the negotiations for an “in principle” Comprehensive Agreement on Investment (CAI) between China and the European Union.
On January 19, 2021, the main shareholders of a consortium controlling the billion-dollar concession for Santiago’s Arturo Merino Benítez international airport informed Chilean President Sebastián Piñera of their intention to initiate an ICSID claim. The investors claimed they had suffered losses as a consequence of measures taken in response to the COVID-19 pandemic.
The UNCITRAL Working Group III (WGIII) convened virtually from February 8 to 12 for its 40th session. During this session, the group’s deliberations focused on two main issues related to structural reform of ISDS: the selection and appointment of ISDS tribunal members in the context of a “Standing mechanism” or “Standing body” (A/CN.9/WG.III/WP.203) and an appellate mechanism (A/CN.9/WG.III/WP.202).
Four decisions adopted by Canada and the European Union on January 29 have moved the parties closer to implementing an Investment Court System (ICS) under the Canada-EU Comprehensive Economic and Trade Agreement (CETA). The decisions on appeals, interpretation, code of conduct, and mediation were formally endorsed by CETA’s Joint Committee and Committee on Services and Investment (CSI) and will take effect once the dispute resolution provision of CETA comes into force.
The EU’s foreign investment screening mechanisms became operational on October 11, 2020. As we’ve reported, guidance on the screening mechanisms, which are implemented by individual member states, was released in March 2020 following the 2019 entry into force of the FDI Screening Regulation.
On December 2, 2020, in an answer to questions submitted by MEPs, the EC suggested that the EU could exit the ECT.
On November 15, 2020, 15 Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP) nearly one year after negotiations came to a close.
On November 9, 2020, the Asian Academy of International Law hosted a virtual event on the use of mediation in investor–state dispute settlement. This event is one of several being organized by UNCITRAL in parallel to the formal meetings of the Working Group III on investor–state dispute settlement reform.
UNCTAD’s IIA Reform Accelerator launched in November 2020.
Negotiators working on multilateral reform of the ISDS system will reconvene on October 5 to 9, 2020, in Vienna for their 39th session. This session, which was originally to be held in March and April 2020, was rescheduled in light of the COVID-19 pandemic.
On July 31, 2020, the Cypriot parliament voted against the ratification of CETA, the trade deal between the EU and Canada.
The U.S. and Kenya formally launched negotiations on the US–Kenya FTA on July 8, 2020. If concluded, the agreement would be the first bilateral trade agreement between the U.S. and a sub-Saharan African state.
On May 14, 2020 the EC initiated infringement proceedings against the UK and Finland for failing to terminate the intra-EU BITs to which they are a party. Though the UK has formally left the European Union, EU law continues to apply to the UK during the transition period, which ends on December 31, 2020.
Following two years of “structured discussions,” the negotiations for a proposed WTO multilateral framework for investment facilitation (MFIF) are set to begin on September 24–25, 2020.
Negotiations for the Indonesia–EU FTA have been ongoing since 2016, with the ninth round taking place on June 15–26, 2020.
The government of India has recently enacted significant restrictions on inward FDI coming from its neighbours, in a move that seems calculated to target Chinese investment.
As we reported, the EC launched a consultation to clarify and supplement rules on cross-border investment within the EU in May 2020.
Two rounds of the negotiations for the modernization of the ECT have been held over the past two months, from July 6 to 9 and September 8 to 11, 2020.
On May 26 2020, the EC launched a consultation to clarify and supplement rules on cross-border investment within the EU. According to the consultation document released by the EC, the […]
On March 25, 2020, the European Commission published a guidance for member states on FDI screening in the face of the COVID-19 pandemic, focusing on, but not limited to, health-related industries.
The director-general of the WTO, Roberto Azevêdo, announced on May 14, 2020, that he will be cutting his term short by one year and stepping down as of August 31. Azevêdo has served in the position since September 1, 2013, with his second term starting in 2017.
The EU released a proposal for the modernization of the ECT on May 27, 2020. This latest draft of the EU’s proposal includes changes to the treaty’s definition of investment, an affirmation of parties’ right to regulate, a narrower definition of FET, and reference to a multilateral investment court. The proposal also suggests several additional articles on sustainable development, frivolous claims, security for costs, interventions by third parties, third-party funding, and valuation of damages.
On May 5, 2020, 23 European Union member states* formally agreed to the termination of intra-EU BITs.
On April 24, 2020, USTR Robert Lighthizer announced that the USMCA would enter into force on July 1 of this year, one month later than was previously agreed upon.
The entry into force of the African Continental Free Trade Area (AfCFTA) has been delayed due to the Covid-19 pandemic, according to the Secretary General of the AfCFTA Secretariat, Wamkele Mene. The first phase of the agreement will now take effect by January 2021 at the earliest.
The 101 WTO members discussing a proposed multilateral framework on investment facilitation are now considering a new “consolidated text,” which is meant to be a stepping stone for formal negotiations once these begin.
Negotiators working on multilateral reform solutions to ISDS reconvened in Vienna in January 2020 to resume their 38th session, holding talks around the possibility of an appellate mechanism, the benefits and challenges of setting up a permanent court on investment issues, and the process around choosing arbitrators and adjudicators.
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The negotiations for ECT modernization are now underway, with the first such meetings held in December 2019 and at least four other sessions planned over 2020.
The talks between China and the EU for a Comprehensive Agreement on Investment saw an important milestone in December 2019, as the two sides exchanged new market access offers. They had exchanged market access offers once previously, in July 2018.
The United States–Mexico–Canada Agreement (USMCA) has been ratified and signed into law in the United States, bringing the trade and investment deal one step closer to entry into force. Of the three countries involved, the only one that has not completed its ratification processes is Canada.
The United Kingdom’s exit from the EU formally took place on January 31, 2020, following years of talks and repeated extensions in the Brexit deadline. With the United Kingdom now in an 11-month transition period, questions remain over the shape of the country’s future trade and investment relationship with the EU and other partners, though some further indications of what this may entail are beginning to emerge.
The new year saw the entry into force of two new trade deals involving Australia, namely those involving Peru and Hong Kong. The two agreements both feature investment chapters and were ratified in the Australian legislature in late December, together with a separate accord involving Indonesia.
The European Parliament has given the green light to the 27-nation bloc’s trade and investment agreements with Vietnam, over seven years after those negotiations formally began.
A group of 20 civil society organizations and trade unions from the African continent have circulated a letter questioning the EU’s multilateral investment court (MIC) proposal in the context of the UNCITRAL Working Group III talks on multilateral ISDS reform and urging for a set of alternative proposals to advance instead.
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The UNCTAD High-Level IIA Conference, held in Geneva, Switzerland, in November 2019 featured a session dedicated to investment facilitation and promotion.