Safeguarding local communities’ interest through regulatory autonomy – a feasibility analysis of NPM provisions in investment treaties

Investment law and intellectual property (IP) law have largely developed unaffected by each other and, so far, any discussion on their interaction has been largely theoretical. That is until recently, when a small number of high-profile investment disputes has drawn attention to the interaction between national IP regimes and the international investment system. Christophe Geiger brought together experts from the worlds of IP and trade and investment law to explore the many questions that the interplay between these two conceptually very different systems raise. The Research Handbook on Intellectual Property and Investment Law addresses this evolving relationship in two parts. First of all, it analyses the systemic interaction between investment law and IP law in its national and international dimensions. Within the first part, one section addresses the protection of IP in trade and investment treaties, and another discusses the impact of investment protection on policy and regulatory autonomy. The section part begins with Henning Grosse Ruse-Khan, the author of an authoritative monograph on IP protection in international law, who sets the scene by outlining the elements of IP protection in trade and investment agreements. He notes opposing trends in international IP treaties and international investment agreements. Whereas the former limit the scope of national regulatory powers, the latter seem to grant Member States greater policy space. These opposing trends are further analysed by Susy Frankel who contrasts the object and purpose of IP and investment protection in treaties that protect both. The fundamental question of whether IP is protected as an investment and therefore falls within the scope of protection of investment law in the first place is addressed by Ruth Okediji and Carlos Correa. Both discuss the conditions for protection and how the scope of protection should be defined in order to retain policy space for states and to avoid abusive investor claims. The other chapters discuss the fundamental protection standards of international investment agreements (national treatment, most favoured nation and fair and equitable treatment) as applied to IP. Three chapters in the second section return to the question of national autonomy. They address issues raised by recent investment cases that involved IP claims. While Cynthia Ho argues that investor–state arbitration might have negative aspects on TRIPS flexibilities, Simon Klopschinski and Daniel Gervais focus on the notion of public policy in an investment context and how investment tribunals should approach this notion.

The potential negative effects of investment treaties and investment treaty arbitration on public policy issues have thus produced that many states implemented reforms within International Investment Agreements (IIAs) towards rebalancing investment protection and the right of the host state to regulate. However, this practice has not been broadly welcomed by all South American countries. This paper only aims to provide an overview on the two current approaches to tackle such concerns within this region, hereby described as a participation and a non-participation approach, by addressing innovations in IIAs and in national policies on preventing and managing investment treaty claims, respectively concluded and adopted since 2004. After a brief description of some regional factors which contributed and influenced the formation of these approaches, this study concludes that, though their few own developed contributions, the “participation approach” of some South American states mainly follows the NAFTA pragmatism in reforming substantive and procedural provisions within IIAs; while others favoured a “non-participation approach” evinced by the withdrawal of the ICSID Convention as well as the revision and the denunciation of BITs. In addition to these national developments, the Union of South American Nations (UNASUR) and to a lesser extent, the Bolivarian Alliance for the People of Our America's (ALBA), currently held the regional dialogue on seeking alternatives to the current regime for the settlement of investment disputes, without entering into the discussion of substantive and procedural issues within IIAs, which would be a more suitable strategy for dealing with the concerns initially mentioned

The Investment Chapters of the EU's International Trade and Investment Agreements in a Comparative Perspective

Investor-State Dispute Settlement (ISDS) clauses in international investment agreements have traditionally been based on an approach which may be termed ‘light touch regulation’ of investment protection. The avenue taken by the recently negotiated EU draft agreements, the Comprehensive Economic and Trade Agreement (CETA) and the EU-Singapore Free Trade Agreement (EUSFTA), can be described as ‘more comprehensive regulation’. Likewise, EUSFTA and CETA provide a rather detailed body of law on substantive standards for the protection of foreign investment. While this may add to the clarity and predictability of the current regime of international investment law, it may also lead to a reduced standard of protection. Compared with other agreements, EUSFTA and CETA have attempted to rebalance the protection of private property and the host state’s regulatory autonomy. In terms of the regulation of ISDS proceedings, EUSFTA and CETA preserve its principle characteristics but deliver moderate change in five areas: (1) consultation mechanisms, (2) the relationship between ISDS and domestic remedies, (3) the appointment and conduct of arbitrators, (4) cost allocation, and (5) transparency rules. This study proposes (1) further development regarding the coordination between effective domestic legal systems and ISDS and (2) the start of negotiations for the establishment of a permanent appeals mechanism in a regional or bilateral context.

Labor Provisions in International Investment Agreements: Prospects for Sustainable Development

International Investment Agreements (IIAs) are treaties signed at the bilateral, regional or multilateral level by two or more countries to protect investments made by investors of both the countries. In this chapter, IIAs refer to standalone investment agreements such as bilateral investment treaties and also investment chapters in free trade agreements. IIAs protect investments by imposing conditions on the regulatory behaviour of the host state and thus, prevent undue interference with the rights of the foreign investor. These conditions include restricting the host state from expropriating investments, barring for public interest with adequate compensation; imposing restrictions on host states to discriminate against foreign investment, barring certain circumstances given in the IIA; allowing for repatriation of profits subject to conditions agreed to between the two countries; and most importantly allowing individual investors to bring cases against host states if the latter’s sovereign regulatory measures are not consistent with the IIA to be monetarily compensated. This is known as the investor-state dispute settlement system. In this chapter, the dispute settlement system along with the network of IIAs is referred as investment treaty arbitration (ITA).

Investor-state dispute settlement (ISDS) claims mostly challenge public interest regulatory measures. This has led to efforts to reform international investment agreements (IIAs), with some states terminating them. Orthodox capital protection-centred scholarship maintains support for IIAs, claiming they are necessary to attract investment for development. Policy space-centred critical scholarship rejects or is critical of IIAs saying their limitations on regulatory autonomy are unjustifiable because private capital alone cannot lead to development. An assessment of public interest safeguards in public-private arbitration in national constitutions and statutes is missing in this scholarship. Accordingly, I analyse the constitutional foundations of public-private arbitration in Ghana and show that in conformity with the constitutional role of public institutions, arbitration legislation safeguards the public interest. Therefore for Ghana and similarly placed African states to retain their right to regulate, arbitral tribunals must respect and uphold the protections accorded the public interest constitutionally and in arbitration legislation.

Investment treaties are entered into by and between States in order to promote investments and greater economic cooperation by providing an international legal framework establishing standards of protection and a mechanism for dispute resolution for foreign investors. Restrictions in States’ right to regulate are integral parts of these agreements. The COVID-19 pandemic reignited criticism towards the investment treaty arbitration system and the effects it may have on States’ regulatory autonomy. A number of reforms of relevance to investment treaty arbitration are currently ongoing and recently signed treaties show a clear trend towards including provisions intended to safeguard States’ regulatory autonomy. Investment treaty arbitration involving pharmaceutical investors is still relatively uncommon, but with increased pressure on health systems and in light of global challenges relating to access to medicines, this may change.

The investment arbitration launched by Philip Morris Asia (PMA) against Australia in 20111 in relation to Australia's mandatory plain packaging of tobacco products is a recent reminder of the significant protections for intellectual property rights (IPRs) in international investment agreements. Given its focus on trademarks, the Philip Morris dispute provides a useful case study for exploring the relationship between intellectual property and international investment law. The parallel legal challenges brought by various tobacco companies against Australia in the High Court of Australia2 on constitutional grounds and by Ukraine,3 Honduras,4 the Dominican Republic,5 Cuba6 and Indonesia7 against Australia in the World Trade Organization (WTO) also make this a valuable case for demonstrating the fragmenting nature of intellectual property law at the domestic and international levels. That fragmentation poses challenges for international trade and investment law, raising questions concerning the relationship between intellectual property rights conceived at the domestic level with the protections available in international fora. For example, what significance does the High Court's conception of intellectual property under Australian law have for the claims against plain packaging under the Agreement between the Government of Hong Kong and the Government of Australia for the Promotion and Protection of Investments (‘Hong Kong-Australia BIT’)8 and the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)? By using the Philip Morris case study, this chapter aims to explore the complex interaction between intellectual property and international investment agreements (IIAs), meaning bilateral investment treaties (BITs), plurilateral investment treaties such as the Energy Charter Treaty, and preferential trade agreements containing investment provisions. After explaining the background to the Philip Morris dispute in its various forms, we consider the protection of intellectual property as an ‘investment’ under IIAs. We then examine three substantive investment obligations in connection with intellectual property: most-favourednation obligations, expropriation, and so-called ‘umbrella clauses’. This chapter reveals the high degree of uncertainty permeating the relationship between intellectual property and international investment law.

The global community still lacks a regime for sovereign debt restructuring. There is increasing concern that international investment agreements may become a ‘court’ for sovereign workouts. Are international investment agreements the appropriate place for the global community to resolve sovereign debt restructuring in the event of a financial crisis? It has been often overlooked that the definition of a covered investment within international trade and investment agreements often includes sovereign debt. In lieu of this, this article analyses the extent to which investment provisions in various treaties may hinder the ability of nations and private creditors to comprehensively negotiate sovereign debt restructurings when a debtor nation has defaulted or is close to default on its government debt. It is found that the treatment of sovereign debt varies considerably in terms of strength and applicability across the spectrum of now thousands of trade and investment treaties in the world economy. It is also found that most treaties may restrict the ability to restructure debt in the wake of a financial crisis. These findings could undermine the ability of nations to recover from financial crises and could thus broaden the impact of such crises.Policy Implications Exclude sovereign debt from IIAs. The exclusion of sovereign debt from ‘covered’ investments under future treaties would relegate sovereign debt arbitration to national courts and to international financial bodies. Many IIAs already exclude sovereign debt, such as NAFTA and others. Clarify that the essential security exceptions cover financial crises and that sovereign debt restructuring taken by host nations is ‘self‐judging’ and of ‘necessity’. Tribunals have recently acknowledged that nations acts to prevent and mitigate crises are acts of ‘essential security’, but need to make such decisions on their own (hence, ‘self‐judging’). Create safeguards for Sovereign Debt Restructuring (SDR). A handful of recent IIAs have included explicit provisions regarding SDR. While this is a positive development, such provisions may not prove to be fully adequate. State‐to‐state dispute resolution for SDR and crisis related instances may be more prudent given that governments need to weigh a host of issues in such circumstances. States attempt to examine the economy wide or public welfare effects of crises whereas individual firms rationally look out for their own bottom line. Investor‐state tips the cost‐benefit upside down, giving power to the ‘losers’ even when the gains to the winners of an orderly restructuring may far outweigh the costs to the losers.

The article is dedicated to analyzing the issue of determining the boundary of the legitimacy of state measures in regulating and controlling foreign investments within national jurisdiction, in accordance with national laws and regulations, and in line with national objectives and priorities. Additionally, this article reviews key regulatory trends in the international legal sphere concerning the protection of foreign investments. Through the analysis, the content of the main issues in international investment law has been clarified, including the protection of foreign investments and the differentiation (legal classification) of state actions that constitute indirect expropriation, discrimination, unfair treatment, or other violations of international obligations under international investment agreements. Such actions create the right to challenge them through international arbitrations, potentially leading to compensation obligations. On the other hand, state measures taken within their right to regulate in the public interest are not subject to compensation. Moreover, previously published theoretical insights regarding the interaction between the legal regime of foreign investment (international investment treatment) and the state guarantees for the protection of foreign investments have been importantly refined. Relevant examples are provided concerning both these guarantees and the key approaches to forming a regulatory framework for the domestic regulation of foreign investments, including their admission and restrictions. The first approach assumes that special regulations apply to foreign investors, partially overlapping with those established for national investors. In developing countries in Africa, Latin America, and Asia, special foreign investment laws typically exist, which may include separate laws or investment codes. The second approach is more characteristic of countries with developed economies. Under this approach, legislators do not establish special laws governing foreign investments but introduce significant restrictions. Such restrictions usually apply to specific industries or sectors in which foreign participation may be entirely prohibited or limited. Additionally, investment activities may require obtaining special permits, and states may implement special screening mechanisms. But the key research finding is that national law establishes the legal framework for creating the general legal regime of foreign investment, which is realized, among other things, through the sub-institution of state guarantees for the protection of foreign investments. This sub-institution may and may not be even directly linked to the actual implementation of foreign investments, but always exists in national legislations. It is also worth noting that the prevailing trend is the continuous development of national foreign investment legislation to implement policies that contribute to global economic growth and the overall welfare of the population. An empirical legal indicator of this trend is the gradual disappearance of differences between legal regimes for national and foreign investors, facilitated by the introduction of legal mechanisms for foreign investor access. Key words: international investment law, international investments, investment treatment, bilateral/multilateral investment treaties, international investment arbitration, state guarantees for the protection of foreign investments.

This editorial article introduces to the special issue of AIB Insights focused on international trade and investment agreements. The issue includes “International Trade and Investment Agreements: Sovereignty at Bay in the 21st Century?” by Klaus Meyer and Daniel Rottig; “Why Do Countries Commit to ISDS for Disputes with Foreign Investors?” by Srividya Jandhyala; “The Outsized Costs of Investor–State Dispute Settlement” by Lise Johnson and Lisa Sachs; “Is It Chilly Out There? International Investment Agreements and Government Regulatory Autonomy” by Christine Côté; and “Once BITten, Forever Shy: Explaining India’s Rethink of Its Bilateral Investment Treaty Provisions” by Premila Nazareth Satyanand.

Statess Reassertion of Control Over International Investment Law - (Re)Defining Fair and Equitable Treatmentt and Indirect Expropriationn

Relationship Between FDI Inflows and Bilateral Investment Treaties/International Investment Treaties in Developing Economies: An Empirical Analysis

International investment law aims to provide a stable framework for cross-border investment, including in the energy sector. It has gained relevance in recent years, as more and more investment treaty arbitrations have been initiated by foreign investors. In fact the year 2015 witnessed a record number of new treaty-based investor-State dispute settlement (ISDS) cases. As of 2016 there are now almost 700 publicly-known ISDS claims. This proliferation is mainly thanks to increasingly common and increasingly popular dispute settlement provisions in international investment agreements (IIAs) which explicitly allow foreign investors to resort to arbitration against their host State in cases of alleged non-compliance with any of the substantive treatment standards. Currently, the ‘universe’ of IIAs consists of more than 3300 agreements. Around 2900 of these agreements are bilateral investment treaties (BITs). Apart from that, there a number of bilateral and regional preferential trade agreements (PTAs) which contain investment chapters, with a prominent example being the North American Free Trade Agreement (NAFTA). Finally, there are sector-specific treaties with investment provisions, such as the Energy Charter Treaty. A general multilateral agreement on investment has not yet come to fruition.