{"id":3578,"date":"2016-02-29T09:34:55","date_gmt":"2016-02-29T15:34:55","guid":{"rendered":"http:\/\/itn.mattrock.ca\/?p=3578"},"modified":"2024-08-09T18:26:46","modified_gmt":"2024-08-09T16:26:46","slug":"news-in-brief-22","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2016\/02\/29\/news-in-brief-22\/","title":{"rendered":"News in Brief"},"content":{"rendered":"

Trans-Pacific Partnership agreement signed in Auckland; UN independent expert calls on states to safeguard regulatory space<\/strong><\/p>\n

On February 4, 2016, trade ministers from twelve Pacific Rim nations met in Auckland, New Zealand, to sign the Trans-Pacific Partnership<\/a> (TPP) agreement.<\/p>\n

On the eve of the meeting, UN Independent Expert on the promotion of a democratic and equitable international order, Alfred de Zayas, called on governments to issue an interpretative declaration on TPP, reaffirming their commitments to human rights obligations and to the Sustainable Development Goals.<\/p>\n

In his statement<\/a> of February 2, 2016, Zayas indicated that the TPP \u201cis fundamentally flawed and should not be signed or ratified unless provision is made to guarantee the regulatory space of States.\u201d He recalled that the agreement resulted from \u201csecret negotiations without multi-stakeholder democratic consultation,\u201d and would be signed despite \u201cenormous opposition by civil society worldwide.\u201d The expert said that the agreement\u2019s compatibility with international law should be challenged before the International Court of Justice.<\/p>\n

In a report published in August 2015, Zayas had recommended<\/a> abolishing the existing investor\u2013state dispute settlement (ISDS<\/span><\/span>) system.<\/p>\n

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Ecuador\u2019s audit on investment treaties: CAITISA reports leaked<\/strong><\/p>\n

Three reports by CAITISA<\/a>, Ecuador\u2019s citizen audit commission on bilateral investment treaties (BITs), were leaked by online newspaper Diagonal<\/a> on January 24, 2016. CAITISA, formed by experts in foreign investment and international law, was created in 2013 by President Rafael Correa to examine the legitimacy and legality of Ecuador\u2019s BITs and the impact of their application. The commission concluded its work in December 2015.<\/p>\n

In the report on Final Recommendations<\/a>, CAITISA recommends that Ecuador denounce its BITs and negotiate new instruments, whether specific contracts with foreign investors or investment treaties. These new instruments should not include any of the old-style exception protection clauses except for clauses on direct expropriation. In addition, they should include state rights and investor obligations.<\/p>\n

In its observations on international investment arbitration, CAITISA recommends excluding the clause on investor\u2013state dispute settlement (ISDS) from existing and future BITs, and prioritizing adjudication by domestic courts. It also advances proposals for a transition period, which include: prohibiting compound interest in damages awards, providing for exhaustion of local remedies, enhancing transparency in proceedings, limiting arbitrator fees, issuing interpretive statements, creating an appellate mechanism, and establishing a permanent international or regional investment court, with permanent judges.<\/p>\n

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Standing tribunal included in European Union\u2013Vietnam FTA<\/span> <\/strong><\/p>\n

On December 2, 2015, the European Union and Vietnam signed a free trade agreement (FTA), closing three years of negotiations. The text, made public on February 1, 2016, includes the more traditional trade issues, including SPS and TBT, and trade facilitation, but also extends to other issues such as government procurement, competition policy, intellectual property, cooperation and capacity building, state-owned enterprises, and transparency. Like other recent EU<\/span> treaties, it also contains a chapter on sustainable development covering both labour and environmental issues.<\/p>\n

The investment chapter<\/a> adopts the European Union\u2019s emerging approach to investment protection. It also includes a new type of investor-state dispute settlement mechanism, consisting of a standing nine-member tribunal to hear cases at first instance and a permanent six-member appeal tribunal.<\/p>\n

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Germany\u2019s judges and public prosecutors reject proposed investment court system in TTIP<\/strong><\/p>\n

In a statement issued in early February 2016, the German Association of Judges (known by its German acronym, DRB) firmly rejected the proposal published by the European Commission<\/a> on September 16, 2015 to establish an Investment Court System (ICS<\/span>) under the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States.<\/p>\n

The DRB saw no need for the proposed ICS, as existing judicial systems in EU member states guarantee access to justice and grant effective protection to foreign investors. It argued that, even if that were not the case, the issue should be addressed by national parliaments. For the DRB, creating special courts is not the proper way to guarantee legal certainty.<\/p>\n

The statement also questioned whether the European Union has the legislative competence to create an investment court. It pointed out that the proposed court would limit legislative powers and alter the existing court system, both in the European Union and in member states.<\/p>\n

Finally, the statement criticized the proposed procedure and criteria for appointing ICS judges, which would not meet the international requirements for technical and financial independence. According to the DRB, the pool of judges would tend to be limited to persons already involved in international investment arbitration, and ICS would emerge as a permanent arbitration facility rather than as an international court.<\/p>\n

The DRB, founded in 1909, is Germany\u2019s largest professional organization of judges and public prosecutors. The official text of DRB Opinion No. 04\/16<\/a> is available in German only.<\/p>\n

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Commission attempts to reopen CETA<\/span> negotiations with Canada to revisit ISDS<\/strong><\/p>\n

EU officials are said to have requested the new Canadian federal government to revisit the ISDS clause in the Comprehensive Economic and Trade Agreement (CETA), according to reports by CBC News<\/a> on January 21, 2016. CETA negotiations were announced as concluded in August 2014. The CETA<\/a> provides for a more traditional-style ISDS mechanism, which is not in line with the European Union\u2019s new approach on a more permanent investor\u2013state mechanism. As it currently stands, the text is seen as unlikely to be approved by the European Parliament.<\/p>\n

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UNASUR Arbitration Centre one step closer to being established<\/strong><\/p>\n

On January 19, 2016, experts from the Union of South American Nations (UNASUR) met in Montevideo, Uruguay, to finalize agreements regarding the proposed regional centre<\/a> for the settlement of investment disputes. UNASUR is a regional intergovernmental organization of the 12 South American nations: Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela.<\/p>\n

The text establishing the dispute settlement centre, not yet public, was negotiated by foreign ministers, general attorneys, and finance ministers in the region, in consultation with central banks. Once approved by the 12 states, the proposed centre could emerge as a regional alternative to the International Centre for Settlement of Investment Disputes (ICSID<\/span>).<\/p>\n

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TransCanada initiates NAFTA<\/span> arbitration against the United States over rejection of Keystone XL pipeline*<\/strong><\/p>\n

On January 6, 2016, TransCanada initiated arbitration against the United States for \u201cunreasonably delaying approval\u201d of the proposed Keystone XL pipeline and ultimately denying, in November 2015, the company\u2019s application for the required Presidential Permit. Alleging the United States breached its non-discrimination, expropriation, and fair and equitable treatment commitments under the North American Free Trade Agreement (NAFTA), the Canadian company seeks damages<\/a> of over US$15 billion.<\/p>\n

The Keystone XL pipeline, which would carry crude oil from the Canadian province of Alberta to U.S. ports in the Gulf of Mexico, became a contentious political issue in the United States. Environmentalists pointed to the carbon-intensity of extracting oil from the Alberta tar sands, and argued that the pipeline would run counter to the country\u2019s efforts to reduce fossil fuel reliance. Meanwhile, Republican lawmakers and several U.S. states supported the project.<\/p>\n

In its Notice of Intent, TransCanada highlighted that the application review lasted significantly longer than the average for such a pipeline. The Obama Administration admitted<\/a> the review lasted longer because the pipeline became politicized. In a statement after rejecting the application<\/a> on November 6, 2015, President Obama explained: \u201cAmerica is now a global leader when it comes to taking serious action to fight climate change. And frankly, approving this project would have undercut that global leadership.\u201d<\/p>\n

On the same day it initiated arbitration, TransCanada also filed suit against U.S. federal authorities in a U.S. court, claiming<\/a> Obama\u2019s rejection of the application exceeded the president\u2019s constitutional powers and lacked authorization by Congress. This U.S. court case is in addition and parallel to the NAFTA case, which is expected to take several years to resolve. The United States has never lost a challenge under NAFTA\u2019s investment chapter to date.<\/p>\n

*The editorial team acknowledges, with many thanks, the contribution of Jacob Greenberg, Geneva International Fellow from University of Michigan Law and an intern with IISD<\/span><\/span><\/span>\u2019s Investment for Sustainable Development Program.<\/em><\/p>\n

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Philip Morris fails in PCA<\/span> arbitration against Australia over plain packaging laws<\/strong><\/p>\n

On December 17, 2015, a tribunal at the Permanent Court of Arbitration (PCA) issued its jurisdictional award in the case of tobacco giant Philip Morris against Australia over the country\u2019s tobacco plain packaging legislation. According to the PCA website<\/a>, the award will be made available to the public once any confidential information has been redacted. Philip Morris admitted in a news release<\/a> that the tribunal dismissed jurisdiction over the case. Accordingly, the tribunal did not rule on the merits.<\/p>\n

Australian Senator Peter Whish-Wilson welcomed the result<\/a> as a victory, commending plain packaging as an effective public policy tool. However, he cautioned that Australia is not free from similar challenges by foreign corporations under ISDS mechanisms contained in its trade and investment agreements with China, Korea, and the United States. \u201cISDS is the Damocles Sword hanging over Australia’s sovereignty and our right to legislate in the public interest,\u201d he said. The Senator also indicated that the successful defence against Philip Morris reportedly cost Australian taxpayers US$35 million.<\/p>\n

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European Commission gives in to pressures for increased transparency of TTIP texts<\/strong><\/p>\n

All 751 Members of the European Parliament (MEP) will have comprehensive access to all confidential documents relating to TTIP negotiations. The Parliament announced the agreement<\/a> with the European Commission on December 2, 2015, after 11 months of negotiations. Under the operational arrangements<\/a>, MEPs will be able to read the restricted \u201cconsolidated texts\u201d\u2014which reflect EU and U.S. compromises\u2014in a secure reading room at the European Parliament, as well as take handwritten notes.<\/p>\n

On December 4, EU Trade Commissioner Cecilia Malmstr\u00f6m announced<\/a> that reading rooms would be established in the capitals of all 28 EU Member States to allow national members of Parliament (MPs) to analyze the consolidated texts. The announcement was made as the Commissioner spoke to the President of the German Bundestag, Norbert Lammert, addressing the requests he had made in 2015 for access to the documents by German MPs.<\/p>\n

A week before the two announcements, The Guardian<\/a> had obtained documents allegedly revealing that the Commission had given U.S. oil company ExxonMobil access to confidential EU strategies in TTIP negotiations. The Commission denied<\/a> the allegations.<\/p>\n