There are several efforts underway at multiple levels—national, bilateral, regional and multilateral—aimed at reforming theregime. These reform efforts are operating in parallel to developments in other areas of international investment governance, some of which have advanced quickly over the past year, including the structured discussions on investment facilitation at the , as well as efforts in the UN context to craft a binding treaty on business and human rights. This year’s High-Level IIA Conference assessed the progress made to date since launching UNCTAD’s 10 Options for Phase 2 of IIA Reform, looking at trends across multiple areas of international investment governance, as well as across world regions. This Insight summarizes the key takeaways from the 2019 event and considerations for Phase 2 going forward.
The 2016 decision on Argentina’s counterclaim in the Urbaser case provided a frustrating reminder that the international legal regime as it stands is insufficient in holding businesses accountable for human rights violations. Efforts are underway within the UN context to help address this challenge, though how effective the legally binding treaty on business and human rights will be in reconciling the human rights and investment law regimes will depend significantly on its design. It will also depend on how adjudicators treat it relative to other treaties, among other factors. ThisInsight provides an update on the negotiating state of play for this binding treaty, based on the October 2019 talks in Geneva. It highlights important considerations for negotiators, drawing from lessons learned in international investment law and related areas.
The upcoming meeting of Working Group III ofin January 2020 will be a valuable opportunity to intensify the push for real reform of . This Insight provides an update from the October 2019 discussions in Vienna, where countries set out a workplan for their upcoming talks on reform solutions, outlining when to discuss which options. The authors review lessons learned to date and look ahead to the topics slated for discussion in January 2020: a stand-alone review or appellate mechanism; a standing ; and the selection and appointment of arbitrators and adjudicators. Taking a deep dive into each, they highlight key issues for negotiators to consider.
A long-simmering row over plans for two new pipelines that would carry natural gas from Russia into Germany has advanced quickly in recent months, after gas company Nord Stream 2 submitted a notice of arbitration against theunder the on September 26, 2019.
A set of documents purporting to capture the discussions of the United States–United Kingdom Trade and Investment Working Group from 2018 has recently been released into the public domain.
Substantial damages awarded to Perenco for FET breach and expropriation; Ecuador also awarded compensation under environmental counterclaim
Perenco Ecuador Limited v. Republic of Ecuador,Case No. ARB/08/6
Michael Ballantine and Lisa Ballantine v. The Dominican Republic,Case No. 2016-17
Belenergia S.A. v. Italian Republic,Case No. ARB/15/40
Glencore International A.G. and C.I. Prodeco S.A. v. Republic of Colombia,Case No. ARB/16/6
As claimants lacked a protected investment and could not import consent to arbitration via MFN, UNCITRAL tribunal dismisses case against Mauritius on jurisdictional grounds
Professor Christian Doutremepuich and Antoine Doutremepuich v. Republic of Mauritius,Case No. 2018-37
Lao Holdings N.V. v. Lao People’s Democratic Republic,Case No. ARB(AF)/12/6, and Sanum Investments Limited v. Lao People’s Democratic Republic, , Case No. 2013-13
Tribunal finds Pakistan breached FET, expropriation and non-impairment obligations in the context of a mining joint venture with Australian investor Tethyan Copper Company
Tethyan Copper Company Pty Limited v. Islamic Republic of Pakistan,Case No. ARB/12/1
In yet another renewable energy case, Spain held liable for FET breach for frustrating French and Luxembourger investors’ legitimate expectations under the ECT
Cube Infrastructure Fund SICAV and Others v. The Kingdom of Spain,Case No. ARB/15/20
United Utilities (Tallinn) BV and Aktsiaselts Tallinna Vesi v. Republic of Estonia,Case No. ARB/14/24
Negotiations for modernizing the Energy Charter Treaty, a 1994 agreement covering trade, investment and other aspects of the energy sector among its contracting parties, are expected to begin before 2019 draws to a close. Yet given the need identified in myriad other forums to reformand to ensure trade and investment agreements can support ambitious climate action, why aren’t more officials and commentators discussing the possibility of terminating the entirely, or of reconsidering its survival clause for those parties which choose to withdraw? Tania Voon explores the issue and outlines options going forward.
From October 14 to 18, 2019, negotiators will gather in Vienna for the next session of theWorking Group III on reform, where they will move from considering concerns with the current system to assessing possible solutions. In this Insight, Jane Kelsey discusses various examples of how some countries have tested out alternatives to ISDS, such as state–state arbitration, alternative dispute resolution, domestic legislation and enforcement, and the exhaustion of domestic remedies. For each ISDS alternative, she examines what benefits and challenges arose, and how the lessons learned can help inform the next phase of UNCITRAL deliberations.
ICSID Rule Amendment: An attempt to remedy some of the concerns regarding ISDS identified by UNCITRAL WG III
The process for updating’s rules has been taking place in parallel to the Working Group III deliberations on reform, prompting an important conversation of how these efforts may complement each other. In this new Insight, Rafael Ramos Codeço and Henrique Martins Sachetim examine the ICSID rule amendment process, taking a close look at a few key amendments under consideration and examining the extent to which these might help address some of the ISDS-related concerns that have been identified at UNCITRAL.
This piece examines recent trends in the use of third-party funding (TPF) in treaty-basedand the implications of TPF for investor conduct, developments in investment law and host state conduct. TPF has been raised in two multilateral processes currently underway: the talks to amend arbitration rules and to consider multilateral reform of ISDS at . Given the narrow nature of the TPF discussions in ICSID, the authors make the case for policy-makers to consider full or partial bans of TPF at UNCITRAL.
A Bit of Anti-Bribery: How a corruption prohibition in FIPAs can bring a minimum standard of conduct for Canadian investors abroad
Tackling corruption is a crucial step in meeting the objectives set out in16 on “Peace, Justice, and Strong Institutions” and for achieving the SDGs overall. Canada’s investment treaties could play a valuable role in addressing corruption. The piece draws from examples such as Canada’s Foreign Investment Promotion and Protection Agreement (FIPA) program and examines some of the asymmetries inherent in the current regime. The author analyzes some of the language used in Canada’s more recent treaties, such as and the FIPAs with Moldova and Kosovo, and what lessons can be drawn from these and other agreements.
Spain has faced approximately 40 arbitrations since it made the decision in 2010 to rescind or revise various regulatory measures aimed at drawing in greater investments into renewable energy projects. This article examines the awards issued in four of those cases, looking in particular at how the tribunals interpreted and applied thestandard. The author looks at the potential problems that can emerge when states are unsure of how any given tribunal may interpret FET or other key standards and presents some potential solutions.
Delegates involved in theWorking Group III process on multilateral reform have until July 15, 2019 to submit to the UNCITRAL Secretariat their reform proposals and the timing for when such items may be considered in an overarching project schedule. That schedule would help guide the working group under Phase 3 of its mandate, which is devoted to crafting solutions to ISDS-related concerns.
Thehas deemed that the included in the Canada– is consistent with EU law, issuing its final opinion on April 30, 2019.
The Mexican Senate approved the implementing legislation for the United States–Mexico–Canada Agreement () on June 19, 2019, by an overwhelming majority of 114 votes in favour, with less than a dozen against or abstaining.
Claims against Albania dismissed by ICSID tribunal as the Anglo-Adriatic Group did not have a protected investment
ANGLO-ADRIATIC GROUP LIMITED V. REPUBLIC OF ALBANIA,CASE NO. ARB/17/6
ICSID tribunal finds Spain breached ECT obligations by failing to provide a reasonable rate of return
RREEF INFRASTRUCTURE (G.P.) LIMITED AND RREEF PAN-EUROPEAN INFRASTRUCTURE TWO LUX S.A R.L. V. KINGDOM OF SPAIN,CASE NO. ARB/13/30
ICSID tribunal upholds Panama’s plea of illegality in the making of an investment in a tourism project located in an Indigenous area
ÁLVAREZ Y MARÍN CORPORACIÓN S.A., BARTUS VAN NOORDENNE, CORNELIS WILLEM VAN NOORDENNE, ESTUDIOS TRIBUTARIOS AP S.A. AND STICHTING ADMINISTRATIEKANTOOR ANBADI V. REPUBLIC OF PANAMA,CASE NO. ARB/15/14
India found in breach of BIT with Germany by UNCITRAL tribunal in respect of agreement for lease of electromagnetic spectrum
DEUTSCHE TELEKOM AG V. THE REPUBLIC OF INDIA,CASE NO. 2014-10
PL HOLDINGS S.À.R.L. V. REPUBLIC OF POLAND (CASE NO. V2014/163)
Investors’ legitimate expectation claims against Italy dismissed due to the absence of specific commitments
BLUSUN S.A., JEAN-PIERRE LECORCIER AND MICHAEL STEIN V. ITALIAN REPUBLIC,CASE NO. ARB/14/3
Investment treaty arbitration is often expected to focus on technical issues. In practice, however, domestic political discussions and processes can have a major impact on investment disputes. The authors map out the variety of state conduct characterized by tribunals as politically motivated or influenced. They also examine the different ways in which arbitral tribunals have responded to host state conduct resulting from domestic political considerations.
Australia and Indonesia have now signed their Comprehensive Economic Partnership Agreement (IA-CEPA), bringing to a close a negotiating process that began in November 2010. The two countries signed the agreement on March 4, 2019. The IA-CEPA also includes an investment chapter and four related annexes, which cover an arbitrators’ code of conduct; expropriation and compensation; foreign investment policy; and public debt.
conferred a broad mandate on Working Group III to consider possible reform of . In Phase 1 governments identified and considered concerns about ISDS. Phase 2, where they consider whether reform is desirable in light of those concerns, is well advanced. The next meeting in New York in April 2019 is expected to conclude this phase and decide how to pursue the final phase, in which governments will develop any relevant solutions to recommend to the Commission. This note addresses three issues at the heart of the legitimacy crisis confronting the international investment regime that should inform the remainder of Phase 2.
refers to rules and practices companies follow voluntarily to limit the negative social, environmental and other externalities caused by their activities. There is a trend to incorporate CSR standards in investment treaties. Could CSR clauses be useful in consolidating enforceable investor obligations and serving as a basis for state counterclaims?
Judges of the International Court of Justice decide to no longer participate as arbitrators in ISDS cases
In a speech to the United Nations General Assembly on October 25, 2018, Judge Abdulqawi Yusuf, President of the International Court of Justice (ICJ), mentioned that the court has decided to restrict the practice of allowing members to serve in arbitral tribunals.
Investment arbitration is heavily relied upon around the globe and has to cope with the demands of increasingly complex proceedings. At the same time, it has come under close public scrutiny in the midst of heated political debate.
Burlington Resources Inc. v. Republic of Ecuador,Case No. ARB/08/5 (Published in 2018 in International Investment Law and Sustainable Development: Key cases from the 2010s and on this website on October 18, 2018. Read more here.) Decisions and Award are available at https://www.italaw.com/cases/181 Keywords Taxation, investor obligations, environmental counterclaim Key Dates Request for Arbitration: April […]
The backlash against investment arbitration has led to a wave of investment law reform. Approaches include creating obligations relating to investor conduct, clarifying existing disciplines, safeguarding policy space and revisingmechanisms. This piece investigates the link between investment treaty design and the risk of arbitration claims.
is releasing an e-book summarizing and analyzing 10 treaty-based investor–state arbitration cases decided in the 2010s. The cases are relevant to a range of issues relating to sustainable development, including environmental protection, socio-environmental impact assessment, renewable energy, taxation, corruption and human rights.
NAFTA 2.0 finalized, announced as USMCA: Mexico, United States agree to limit ISDS clause; Canada to pull out of ISDS after a three-year window
On September 30, 2018, U.S. Trade Representative (USTR) Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland announced that the two countries had reached an agreement, alongside Mexico, on a modernized trade deal.
In a September 12, 2018 letter, 312 legislators—including Democrats as well as Republicans—from all 50 U.S. states wrote that they “strongly support” U.S. Trade Representative (USTR) Robert Lighthizer’s efforts to removefrom .
ANTARIS SOLAR GMBH AND DR. MICHAEL GÖDE V. CZECH REPUBLIC,CASE NO. 2014-01
In May 2018, the Dutch Ministry of Foreign Affairs published its new draft model bilateral investment treaty (), in hopes to foster rethinking of existing and future Dutch BITs. Will this revised model achieve this goal, or does it fall short of the promised policy reset?
Third-party litigation funding (TPF) is a rapidly expanding industry composed of speculative investors who invest in a legal claim for control of the case and a contingency in the recovery. In the wake of the global financial crisis and the demand by speculative finance for new investment vehicles, TPF has discovered the regime of bilateral investment treaties (BITs) with investor–state dispute settlement () mechanisms.
On July 17, 2018,President Jean-Claude Juncker and Japanese Prime Minister Shinzo Abe signed the Japan–European Union ( ) Economic Partnership Agreement (JEEPA).
Working Group III of the United Nations Commission on International Trade Law () continued discussions on possible reform of investor–state dispute settlement ( ) at its 35th session, held April 23–27, 2018 in New York.
Why did governments create a special legal regime in which foreign investors can bring cases directly against states?
The note highlights that the number of new IIAs concluded in 2017 was the lowest since 1983, and that, for the first time, the number of effective treaty terminations outpaced the number of new IIAs.
It will take time for dialogues onreform to produce results. In the interim, rather than continue to assume the unjustified risks associated with the flawed ISDS system, states could consider two near-term options. This piece looks at the advantages and disadvantages of each.
An Interview with Luis Guillermo Vélez – Director-General of Colombia’s National Agency for the Legal Defense of the State
On the heels of our 11th Annual Forum of Developing Country Investment Negotiators, we interviewed Luis Guillermo Vélez, Director-General of Colombia’s National Agency for the Legal Defense of the State (ANDJE), to capture his experiences on investment negotiations and disputes, his expectations for investment reform processes and views on the value of the Forum.
The 35th session of Working Group III of the United Nations Commission on International Trade Law () takes place April 23–27, 2018