50th anniversary of the first bilateral investment treaty: An occasion for celebration or reflection?
As part of the celebrations, Pakistan Prime Minister Yousaf Raza Gillani signed a new economic agreement with Germany at an event this week to replace the first bilateral investment treaty signed 50 years ago, in 1959. Since then, there have been over 2,700 such treaties, signed by at least 179 countries.
"The celebrations fail to focus on the implications of these treaties for developing countries, which are based on a format designed to protect the interests of foreign investors and nothing else," said Bernasconi-Osterwalder, senior international lawyer and head of IISD's investment program.
Over 77 countries, the majority of whom are developing states, have faced the consequences of arbitrations launched by investors under such treaties. These agreements are unique in the world of treaties, as they allow private investors to bring a claim directly against states to challenge a wide range of governmental action, including domestic regulation.
"Pakistan may be expecting increased investments and other benefits from the new treaty, but in reality the German-Pakistan treaty is only about Pakistan providing guarantees and assurances to the German investors in Pakistan, not the other way around," she said.
"The diplomatic protocol associated with these agreements, which have often been described as 'photo opportunities,' continues to exert pressure on states to conclude such agreements, despite the growing threat of investor-state claims, " she said.
She added that Germany's own conduct has recently been challenged by a Swedish investor under the Energy Charter Treaty, which may have implications with respect to placing boundaries on the government's ability to implement environmental and social policies.
"There are stark realities that underlie the complexity of these treaties. What we need now is greater transparency, predictability, and new thinking. We need to remove the layers of complexity that undermine the social, economic and environmental aspirations of the developing countries that enter into these agreements."
For additional comment, please contact Nathalie Bernasconi-Osterwalder by email: nbernasconi@iisd.org.
For more information, please contact IISD media and communication officer, Nona Pelletier
Phone: +1-(204)-958-7740, Cell: +1-(204)-962-1303.
About IISD
The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies. Our work inspires better decisions and sparks meaningful action to help people and the planet thrive. We shine a light on what can be achieved when governments, businesses, non-profits, and communities come together. IISD’s staff of more than 250 experts come from across the globe and from many disciplines. With offices in Winnipeg, Geneva, Ottawa, and Toronto, our work affects lives in nearly 100 countries.
You might also be interested in
New Agreement Marks First Step in Addressing Energy Charter Treaty Legacy
This is an important move to prevent legacy arbitration claims under the treaty, but more remains to be done.
Canada's Sustainable Jobs Legislation: A milestone for workers and communities on the path to net-zero
IISD celebrates the Canadian Sustainable Jobs Act, Bill C-50, being officially passed into law as a significant milestone to engage and support workers and communities in moving to a low-carbon economy.
NDCs, long-term strategies should include roadmap for fossil fuel producers: IISD
Analysis by policy think tank IISD shows that seven of the 20 largest fossil fuel producing countries make no mention of fossil fuel production in their Nationally Determined Contributions (NDCs) and six others stated an intention to continue or increase production.
Report Calls on Fossil Fuel Producers to Map “Transition Away” in NDCs
With governments due to submit the next generation of NDCs in 2025 a new report identifies five elements countries should include to reflect the outcome of the global stocktake.