{"id":4574,"date":"2017-09-26T05:58:39","date_gmt":"2017-09-26T10:58:39","guid":{"rendered":"http:\/\/www.iisd.org\/itn\/?p=4574"},"modified":"2024-08-09T18:28:08","modified_gmt":"2024-08-09T16:28:08","slug":"the-2016-morocco-nigeria-bit-an-important-contribution-to-the-reform-of-investment-treaties-tarcisio-gazzini","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2017\/09\/26\/the-2016-morocco-nigeria-bit-an-important-contribution-to-the-reform-of-investment-treaties-tarcisio-gazzini\/","title":{"rendered":"The 2016 Morocco\u2013Nigeria BIT: An Important Contribution to the Reform of Investment Treaties"},"content":{"rendered":"

On December 3, 2016, Morocco and Nigeria signed one of the most innovative and balanced bilateral investment treaties<\/a> (BITs) ever concluded. Although it has not entered into force yet, the BIT<\/span> is a valuable response from two developing countries to the criticism raised in the last few years against investment treaties, most prominently unbalanced content, restrictions on regulatory powers and inadequacies of investment arbitration.<\/p>\n

1. Background<\/h2>\n

In the last couple of decades, Africa has functioned as a normative laboratory for investment treaties.[1]<\/a> Several sub-regional organizations, including the Common Market for Eastern and Southern Africa (COMESA<\/span>), the Economic Community of West African States (ECOWAS<\/span>), the East African Community (EAC<\/span>) and the Southern African Development Community (SADC<\/span>), have prepared templates and concluded investment treaties that contain largely innovative provisions aimed at better calibrating the legal protection of the interests of the different stakeholders. However, at the same time, African governments\u2014as well as countries in other continents\u2014have become more reluctant to ratify new BITs and have even denounced several existing BITs. Moreover, African states have been hesitant to adopt the Pan African Investment Code (PAIC) in the form of a binding treaty and in 2016 SADC Members adopted an amendment to the Protocol on Finance and Investment removing the provisions on investor\u00ad\u00ad\u2013state dispute settlement (ISDS<\/span>).<\/p>\n

In this context, the Morocco\u2013Nigeria BIT is a remarkable attempt made by two developing countries to bring investment treaties in line with the recent evolution of international law. The four references to sustainable development contained in the preamble immediately reveal the overarching objective of the treaty. The definition of investment in Art. 1(3) further requires that investments contribute to sustainable development, while under Art. 24 (1) investors \u201cshould strive to make the maximum feasible contributions to the sustainable development of the host State and local community.\u201d<\/p>\n

From the institutional standpoint, the treaty establishes a Joint Committee composed of representatives of both Parties. It has the following responsibilities:<\/p>\n

(a) to monitor the implementation and execution of the treaty (including facilitate the exchange of information and when appropriate set corporate governance standards).<\/p>\n

(b) to debate and share opportunities for the expansion of mutual investment.<\/p>\n

(c) to promote the participation of the private sector and civil society.<\/p>\n

(d) to seek to resolve any issues or disputes concerning Parties\u2019 investment in an amicable manner.<\/p>\n

2. Standards of protection<\/h2>\n

The definition of investment contained in Article 1(3) the treaty is inspired by the Salini<\/em> decision[2]<\/a> and requires, in addition to the contribution to sustainable development, the following characteristics: commitment of capital, search for profit, assumption of risk and certain duration. Importantly, the definition of investment excludes portfolio investments.<\/p>\n

While ensuring a level of substantive protection comparable to that traditionally contained in BITs, the treaty clearly specifies the obligations of the host state. Starting with contingent standards, the national treatment standard applies in like circumstances, which are indicated in the non-exhaustive list of Article 6(3). \u00a0Under Article 7 investors are entitled to the minimum standard of treatment (MST) guaranteed under customary international law. The same provision further elucidates that fair and equitable treatment (FET<\/span>) includes \u201cthe obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of a Party,\u201d while full protection and security refers to \u201cthe level of police protection required under customary international law.\u201d The remaining substantive provisions, including that on expropriation, transfer of funds and subrogation, largely reflect consolidated BITs practice.<\/p>\n

3. Obligations for foreign investors<\/h2>\n

The treaty introduces a series of obligations upon investors. They must comply with environmental assessment screening and assessment processes in accordance with the most rigorous between the laws of the host and home states, as well as a social impact assessment based on standards agreed within the Joint Committee (Art. 14(1) and 14(2)).<\/p>\n

After establishment, investors:<\/p>\n