Reforms to Investor-State Dispute Settlement (ISDS) are being discussed in the United Nations Commission on International Trade Law (UNCITRAL) Working Group III. One possible reform is the development of an appellate mechanism, either as part of the proposed two-tier standing investment court, or as a stand-alone appellate mechanism. From the perspective of developing countries as host states that face possible claims from investors, how appealing is an appellate mechanism in ISDS?
US-China trade deal: preliminary analysis of the text from WTO perspective
By Peter Lunenborg
The long-awaited ‘Phase 1’ trade deal between the United States and China, officially termed the ‘Economic and Trade Agreement between the Government of the United States of America and the Government of the People’s Republic of China’, was signed on 15 January 2020. It will enter into force on Valentine’s Day, on Friday, 14 February 2020. This deal is a result of US exercise of political power and unilateral World Trade Organization (WTO)-inconsistent tariffs in order to extract trade concessions, an expression of the most pure protectionism that the WTO is supposed to prevent. Nevertheless, the WTO was unhelpful in addressing the US economic aggression against China. This failure to protect a Member from illegitimate unilateral measures is, perhaps, one of the most significant manifestations of the often-mentioned ‘crisis’ of the WTO, and actually is one of the subjects on which the proposed ‘reform’ of the organization should focus.
Intellectual Property under the Scrutiny of Investor-State Tribunals
Legitimacy and New Challenges
By Clara Ducimetière
In 2009, C.S. Gibson was suggesting that: “With this early coverage of intellectual property in BITs, it is perhaps surprising that there has yet to be a publicly reported decision concerning an IPR-centered investment dispute. Given the trajectory of the modern economy, however, in which foreign investments reflect an increasing concentration of intellectual capital invested in knowledge goods protected by IPRs, this could soon change”. A couple of years later, the first investment cases dealing with IP issues were made public.
In this context, this paper first addresses the conditions that have to be fulfilled in order to bring intellectual property claims in investment arbitration, by touching upon the question of the definition of an investment in theory and in practice. It also tries to shed light on some of the implications of recent arbitral awards touching upon this interaction between intellectual property and investment protection, from a legal and regulatory perspective.
On the other hand, the specific situation of the European Union is scrutinized, and in particular the project put forward by the European Commission to adapt the dispute settlement system for the protection of investments.
Challenges of Investment Treaties on Policy Areas of Concern to Developing Countries
By Kinda Mohamadieh
Country experiences have revealed that international investment agreements (IIAs) could have an adverse policy impact on various policy areas that are generally important for developing countries in relation to the achievement of their development objectives. This policy brief gives an overview of challenges resulting from IIAs to major policy areas of concern to developing countries. These policy areas include industrial policy, tax reform, handling debt crisis, the use of capital controls, intellectual property rights, public-private partnerships, and climate change action in relation to investment in clean technologies.
The Future of Investor-State Dispute Settlement Deliberated at UNCITRAL: Unveiling a Dichotomy between Reforming and Consolidating the Current Regime
By Kinda Mohamadieh
Reform of investor-state dispute settlement (ISDS) is being deliberated at the United Nations Commission on International Trade Law (UNCITRAL) Working Group III, which will be meeting in New York between the 1st and 5th of April 2019. For several years, the ISDS regime has been under scrutiny from voices in both developed and developing countries. ISDS reforms have been addressed in multiple forums, including national, bilateral, regional and multilateral levels, such as the United Nations Conference on Trade and Development (UNCTAD). Reforms could include moving away from arbitration as the norm for dispute settlement between foreign investors and host states or end up by introducing adaptations that might make arbitration in ISDS cases perform in a more acceptable way. Finding one-size-fits-all solutions in these deliberations is unlikely. Advancing relevant reforms would require full and effective participation of interested countries, equal opportunity for different points of views to be heard and integrated into the design of any potential outcome, and effective mechanisms to address any potential conflicts of interest within this forum.
UNCITRAL Working Group III: Can Reforming Procedures Rebalance Investor Rights and Obligations?
By Lorenzo Cotula and Terrence Neal
The work of the United Nations Commission on International Trade Law (UNCITRAL) provides an opportunity to rebalance the international investment regime – but only if the full gamut of key issues are identified. Requiring investors to uphold standards of responsible business conduct (RBC) is largely a function of substantive rights and obligations, but it also presents procedural dimensions that fall within the purview of the UNCITRAL process. This policy brief explores the issues and discusses possible options for reform.
Building a Mirage: The Effectiveness of Tax Carve-out Provisions in International Investment Agreements
By Daniel Uribe and Manuel F. Montes
The present policy brief analyses the language of taxation carve-out provisions incorporated in International Investment Agreements (IIAs), and its effectiveness with regards to restricting the protection and dispute settlement provisions of IIAs only to non-tax-related claims. It illustrates that even in cases where such carve-out provisions have been incorporated into IIAs, the broad language and lack of clarity in the drafting of such provisions have effectively allowed Investor-State Dispute Settlement (ISDS) tribunals to scrutinize tax measures adopted by States, and even determine that such measures resulted in a breach of State’s obligations under the agreement. It makes recommendations on how States could effectively implement such carve-outs when negotiating, reforming or drafting new international investment agreements.
IP Licence, Trademarks and ISDS: Bridgestone v. Panama
By Pratyush Nath Upreti
Can an intellectual property right or a license authorizing its use be deemed an ‘investment’ under bilateral investment treaties? This policy brief discusses the arguments submitted by the parties in the Bridgestone Licensing Services, Inc. and Bridgestone Americas, Inc. v. Republic of Panama case on questions regarding a trademark license agreement. Bridgestone Licensing Services, Inc. (BSLS) and Bridgestone Americas, Inc. (BSAM) together initiated arbitration proceedings on the grounds that Panama’s Supreme Court decision was unjust and arbitrary, violated Panama’s obligations under the United States-Panama Trade Promotion Agreement (TPA), expropriated their investments, and violated the requirement of fair and equitable treatment (FET) to BSLS’s and BSAM’s investments.
Investor-State Dispute Settlement: An Anachronism Whose Time Has Gone
By Johannes Schwarzer
Investor-State Dispute Settlement (ISDS) – a mechanism that allows foreign investors to bring claims against host governments to an international arbitral tribunal – is a relic that should be abolished. Its alleged benefits have not materialized and its costs – monetary and other – can represent a formidable obstacle to good economic governance. We recommend policymakers to terminate ISDS provisions in existing agreements and eschew them in future trade and investment treaties.
The Cooperation and Facilitation Investment Agreement (CFIA) in the context of the discussions on the reform of the ISDS system
The Brazilian Cooperation and Facilitation Investment Agreement (CFIA) model establishes an alternative approach to dispute resolution. This does not mean, however, that the CFIA is silent with regards to possible disputes arising from breaches to the agreement and/or claims by investors. Based on the premise that the investment regime between two or more countries is a positive-sum game, in which all parties involved win, the CFIA presents an approach based on the prevention of disputes.
How international investment agreements have made debt restructuring even more difficult and costly
International investment and trade agreements are legally binding international treaties which give investors an additional layer of legal protection on top of the host country law and contract law. However, little efforts have been made in ironing out the interface between these different laws and treaties. Inconsistencies and even contradictions have emerged in dispute settlement decisions, sometimes at the expense of public good, sovereignty and financial and economic stability. An asymmetry seems to exist in the allocation of risks and benefits between investors and recipients of investments. (more…)