Bilateral Investment Treaty Negotiations Research Articles

Dual Nationality of a Private Investor in Investment Treaty Arbitration: A Potential Barrier to the Exercise of Jurisdiction Ratione Personae?

Abstract One of the fundamental objectives of international investment agreements (IIAs) is to protect the rights and interests of foreign investors in the territory of a contracting State. Why, then, have tribunals often exercised jurisdiction ratione personae over the claims of dual nationals against their own State? The answer lies in the silence of IIAs on the matter of dual nationals. Such agreements have failed expressly to mention dual nationals in their definitions of ‘investor’ or ‘national’, which has created lacunae that are open to interpretation. Tribunals have often fallen back on international law to fill these gaps and accurately to determine the nationality of an investor’s claims. They have taken into consideration the text of the IIAs, the text of institutional rules and the general principles of international law. The principle of ‘dominant and effective nationality’, as propounded in the Nottebohm case, has made frequent appearances in such interpretation processes. However, the application of this principle has been inconsistent over time, with different tribunals taking different stances. In this article, the author traces this varied approaches of tribunals. In doing so, he analyses the text of and the awards delivered in disputes arising out of the Algiers Declaration, the North American Free Trade Agreement (NAFTA), the United States–Mexico–Canada Agreement (USMCA), the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA), the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules and various bilateral investment treaties (BITs). Based on this analysis, the author proposes several changes that States should consider in the future negotiation of BITs to restrict a claim by a dual national against its State of nationality.

RELEVANCE OF RIGHT TO ECONOMIC SELF-DETERMINATION (RESD) PRINCIPLES OF INDONESIAN SOVEREIGNTY IN BILATERAL INVESTMENT TREATY (BIT)

The RESD principle is relevant for protecting the sovereignty of the Indonesian state in BIT negotiations, formulations and implementation. This relevance is based on the willingness and ability of the Indonesian state to exercise its sovereign authority responsibly in managing foreign investment. Accountability of sovereignty functions in the context of foreign investment can be proven through the willingness and ability of the functions it carries to ensure the availability of political good and public good to all parties who invest in their jurisdiction. Proving the country can be done through three main principles of the implementation of state sovereignty, namely responsibly, in accordance with good governance, and international standards of civilization. These three principles are manifested in the country's willingness and ability to guarantee political good in carrying out foreign investment relations with foreign investors and partner countries. Political good in this context is democratic governance (rule of law), good governance (anti-corruption). The implication of this legitimacy is that the state is spared or even cannot be interfered by other authorities, because it has a bargaining position. Keywords: Right to Economic Self-Determination (RESD), Bilateral Investment Treaty (BIT), Sovereignty.

Bilateral Investment Treaty Negotiations between India and U.S: Problems and Prospects

<p><em>Relationship between U.S. and India is at the best phase, especially after former unequivocal support in NSG (Nuclear Supply Group) and helping inclusion in MTCR (Missile Technology Control Regime). The relationship between two oldest and biggest democracies has matured under the headship of Mr. Barak Obama as President and Mr. Nardendra Modi as prime minister. In the recent visit of Indian prime minister, the warm gesture shown by U.S. congress members have further cemented the strength of tie up between two nations. However, despite great chemistry between two nation and its leaders from last many years, both have failed to enter into Bilateral Investment Treaty. India is having Bilateral Investment treaty with more than 80 countries including U.K. and Russia, of which 72 treaties are operational. <a title="" href="file:///C:/Users/SPub/Desktop/July%202016%20IRA%20Issues/IRAJEMS/IRAJEMS1.docx#_ftn1">[1]</a> U.S. is having Bilateral Investment treaties with more than 46 countries including Russia and Bangladesh.<a title="" href="file:///C:/Users/SPub/Desktop/July%202016%20IRA%20Issues/IRAJEMS/IRAJEMS1.docx#_ftn2">[2]</a> Since 2008, the two countries have been engaged in sporadic discussions to conclude the Investment treaty. Negotiations on its wording, based on each country’s revised model treaty texts, will begin soon. Both the leaders Indian Prime Minister Narendra Modi and U.S President Barack Obama affirmed their mutual commitment to facilitating increased bilateral investment flows and fostering an open and predictable climate for investment many a times , But consensus has not been reached till today on certain term and conditions. In the absence of BIT , the rights of investors of both the countries are at the stake. Further, MFN or nationality treatment clause cannot be invoked or granted in the event of any regulatory or other action. Obligations imposed by BIT to protect interest of foreign investors are absent. Further, after losing its first Investment Treaty Arbitration (ITA) claim in 2012 against White Industries, an Australian company and pending 17 cases, India has recently adopted new BIT in 2015 . It also has reflections of pending claims of Vodafone and other cases involving Intellectual Property Rights( Hereinafter refereed as IPR) and the cases of compulsory licences. </em></p><div><br clear="all" /><hr align="left" size="1" width="33%" /><div><p><em><a title="" href="file:///C:/Users/SPub/Desktop/July%202016%20IRA%20Issues/IRAJEMS/IRAJEMS1.docx#_ftnref1">[1]</a> Details Avaialble at <a href="http://www.finmin.nic.in/bipa/bipa_index.asp">http://www.finmin.nic.in/bipa/bipa_index.asp</a>.</em></p></div><div><p><em><a title="" href="file:///C:/Users/SPub/Desktop/July%202016%20IRA%20Issues/IRAJEMS/IRAJEMS1.docx#_ftnref2">[2]</a> Details Avialable at <a href="http://www.state.gov/e/eb/ifd/bit/117402.htm">http://www.state.gov/e/eb/ifd/bit/117402.htm</a>.</em></p></div></div>

Les procédures d’arbitrage dans les accords d’investissement de l’Union européenne. L’enjeu des traités transatlantiques

Forte de la compétence exclusive en matière d’investissement international que lui avait confiée le Traité de Lisbonne, l’Union européenne s’est engouffrée dans la négociation de traités bilatéraux d’investissement dans diverses régions du monde. Selon la Commission, ces traités comporteront un dispositif ambitieux, combinant libéralisation du commerce dans les secteurs primaires, secondaires et tertiaires, convergence réglementaire et protection de l’investissement. Ces nouveaux traités devraient également servir de modèles pour remplacer les nombreux traités bilatéraux d’investissement conclus jusqu’à présent par les pays membres de l’Union. Parmi ces initiatives, les négociations transatlantiques (Canada, États-Unis) représentent l’enjeu le plus important, tant par leur ambition que par le volume des transactions concernées. Lancées en l’absence totale de transparence, ces négociations ont suscité de fortes préoccupations dans les milieux politiques et au sein de la société civile, la création envisagée d’un système d’arbitrage ad hoc investisseurs-États étant la pierre d’achoppement. Devant cette levée de boucliers contre la privatisation de la justice, la Commission cherche désormais à corriger le tir, en proposant une Cour arbitrale permanente dotée d’une instance d’appel. Sur la base de la jurisprudence de la Cour de justice européenne, sont examinés les problèmes que soulèverait une juridiction conférant un accès exclusif, accessible aux seuls investisseurs étrangers, pour des litiges susceptibles de porter sur l’interprétation de la règle nationale et communautaire. Un tel système, qu’il soit ad hoc ou permanent, est-il nécessaire entre des États qui jouissent de systèmes juridiques hautement développés et d’un pouvoir judiciaire indépendant ? Serait-il conforme au principe de l’égalité des citoyens devant la justice ? Porterait-il atteinte à la primauté du droit européen, valeur communautaire essentielle ?

Introduction to the Special Focus Issue on State-Owned Enterprises

This first Special Focus Issue marks the 50th Anniversary of the International Centre for Settlement of Investment Disputes (ICSID). There has been significant development in investment treaty law since the ICSID Convention was signed in 1965. One such recent development is the increasing amount of investment being conducted by State-owned enterprises (SOEs). The scale of foreign investment by SOEs has attracted attention. As yet the commentary is limited. Auspiciously, the ICSID Review is celebrating 30 successful years in providing insightful and current commentary on investment evolution and important developments. It is for this reason that this Special Issue is focused on SOEs. State-owned enterprises are not a new phenomenon with in the landscape of world investment, but they have never attracted as much attention as they do today. The rapid increase of SOE investments from emerging economies, at a time of global economic downturn, has been met with mixed reactions. In some cases, it has been warmly welcomed while in others these large investments are viewed with deep suspicions and concerns, particularly national security and competition distortion concerns. Some States have strengthened their foreign investment review mechanism or have designed a policy framework of competitive neutrality in order to respond to the perceived challenges of SOE investments. Internationally, SOEs are increasingly becoming an important issue in major treaty negotiations, such as the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP) and the China–US bilateral investment treaty (BIT) talks. Notably, the newly released TPP text includes an entire chapter on SOEs, which sets a blueprint for future BIT and free trade agreement negotiations. Nonetheless, the question of whether, and to what extent, SOE investments should be regulated by international investment treaties remain a real and challenging question of international law. The question touches upon the standing of SOEs in investment dispute resolution as well as substantive protections or regulations of SOEs in international investment treaties. Given the active role of SOEs in certain sectors (such as the energy sector) and the special concerns of SOEs from certain regions (such as China), it is hoped that a focused study will undoubtedly provide important insights on some of these SOE issues. The aim is to inform international and domestic policy design on SOE investment regulations in the future.

The China-EU BIT and the Emerging 'Global BIT 2.0'

Since China and the European Union (EU) announced their decision to negotiate a bilateral investment treaty (BIT) at the 14th China–EU Summit in February 2012,3 the two sides have engaged in two rounds of negotiations.4 As the first standalone BIT that the EU has attempted to negotiate and a treaty between two of the world’s largest economies, the China–EU BIT is bound to occupy a unique place in the world history of BIT negotiations.5 This note attempts to assess the key issues that are likely to be involved in the negotiations of the BIT and its global implications. It concludes that, while there are many tough issues to tackle in the negotiations, a successful China–EU BIT is likely to become a symbol for the emerging ‘Global BIT 2.0’.6 Although there are currently BIT arrangements between China and all but one Member State of the EU, the China–EU BIT negotiations would involve far more work than simply consolidating or streamlining ‘the existing BITs between China and the EU Member States into a single and coherent text’.7 Indeed, it can be expected that the two sides will seize this opportunity to update and upgrade their investment treaty arrangements, taking into account the recent world investment treaty practices in general and those of the two sides in particular.

Rethinking & Recasting Bilateral Investment Treaties as Integrative Tools for Sustainable Development: The Kenyan Experience

Sustainable development is a fundamental principle of International Law. It is closely related to and [should be] a core objective of any international treaty seeking to address developmental concerns. Curiously, however, a critical review of [legal] literature reveals seemingly little attention given to the actual assessment of ‘how and to what extent’ existing Bilateral Investment Treaties (BITs) have integrated sustainable developmental concerns. This is particularly in relation to BITs involving developing countries in Africa such as Kenya. Accordingly, taking Kenya as an illustrative case, this study makes a critical assessment of the BITs concluded between Kenya, the Netherlands, Britain, and Germany; with a view to establishing how and to what extent the said BITs have integrated sustainable development. The study argues that most (if not all) BITs remain silent on sustainable development. Further, the methods of integrating sustainable development are premised on placing host state obligations to protect investors and their investments. In doing so, the implied assumption is that protection will attract foreign investment necessary for financing sustainable development. Nevertheless, as the paper highlights, difficulties have arisen in measuring how revenue generated from foreign investment has contributed to the sustainable development due to the unpredictable patterns of revenue inflow from foreign. This in turn creates difficulties in using the said revenue when planning for long-term sustainable yields in development. Accordingly, the paper urges a collectively rethinking of the usage of BITs as a tool for sustainable development involving, states taking deliberate steps to recast BITs to ensure that the process of negotiation of BITs, the structure that emanates from the negotiation and the implementation of the BITs; explicitly seek to integrate sustainable development. This necessarily involves placing obligations on both state and non-state actors in realizing sustainable development. Key words: Sustainable Development, Foreign Investments, public benefit.

International Tax Treaty Policy in Colombia

In 1990, Colombia started a process of liberalization through which the traditional scheme of 'production towards domestic necessities' was left behind. In consequence, reforms in the tax, financial, foreign trade and constitutional systems took place. These reforms aimed at removing obstacles for investment and reinforcing the capital market influencing the domestic and international tax policy in Colombia. Up till recently (2005), Colombia did not conclude double taxation conventions ('DTCs'). The only treaties signed by Colombia prior to 2005, were for instance international tax agreements with regard to air and maritime transportation. Up till 2005, in bilateral and multilateral relations, the reference to tax provisions was left to provisions in regional trade agreements. In Colombia, in the context of the Latin American process of integration, taxation is influenced by the regional agreements of which Colombia is member. Since 2005, Colombia decided to start concluding DTCs mainly due to several factors such as: the objectives of promotion of Colombian products and the promotion of foreign investment included in the two National Plans of Development for Colombia (2003-2006 and 2006-2010). These objectives resulted in the negotiation of DTCs and in the negotiation of bilateral investment treaties (acuerdo de promocion y proteccion reciproca de inversiones). At the time of writing (April 2008), Colombia has concluded DTCs with Spain, Chile, and Switzerland. DTC negotiations have been concluded with Canada. Bilateral investment treaties have been concluded with Peru, Spain and Switzerland. This paper discusses the changes in the international tax treaty policy in Colombia since the process of liberalization in 1990 and it covers the developments in DTC's in the period between 2005-2008. This paper was presented at the international conference: History of Double Tax Treaties organized by the University of Vienna of Economics and Business.

China-US BIT Negotiations and the Future of Investment Treaty Regime: A Grand Bilateral Bargain with Multilateral Implications

China and the United States declared to launch the Bilateral Investment Treaty (BIT) negotiations at the conclusion of the fourth China--US Strategic Economic Dialogue (SED) on June 18, 2008. This BIT negotiation revives a failed BIT program of 20 years ago. It can be expected that China--US BIT negotiations will be concluded successfully because China's approach to investment treaties has recently been Americanized to large degree and because China--US SED can also provide institutional support. Nevertheless, China should seriously evaluate what it will benefit from and will lose from this BIT program from multiple angles, not limited to investment regime only. What is more important, at the historical moment when structural deficiencies have made the investment treaty regime at a crossroad, China and the United States as great powers have a mandate to enhance to reconstruct and make it more balanced, responsive, and accountable through their BIT program. For this purpose, three fundamental dimensions of Special and Differentiated (S&D) treatment, conduct of investors, and sustainable development should be deliberately addressed. Oxford University Press 2009, all rights reserved, Oxford University Press.

The Role of Bilateral Investment Treaties (BITs) in Switzerland: Importance and Alternatives from an Entrepreneurial Perspective

Bilateral investment treaties (BITs) are instruments that aim at promoting and protecting foreign direct investment (FDI). Switzerland holds a leading position worldwide with regard to the negotiation and conclusion of BITs: The Swiss government has ratified 113 of such treaties so far, which means that about every 23rd BIT worldwide is concluded between Switzerland and a third state. Other alternatives for the protection of FDI include (i) political risk insurance (PRI), such as multilateral and national investment guarantees or private investment insurances, (ii) traditional diplomatic protection, and (iii) state contracts, such as concession agreements.The purpose of this paper is to analyze the importance of BITs as well as alternative instruments to safeguard FDI from an entrepreneurial perspective, and to verify whether Swiss enterprises investing abroad appreciate the efforts undertaken by their government. In this endeavor, the first part of the paper outlines the theoretical framework of different instruments offering political risk protection for FDI. The second part of the paper presents the results of an empirical analysis conducted in Switzerland. In this part, a qualitative analysis through explorative and semi-structured interviews, as well as a quantitative analysis using a two-page questionnaire was conducted.The results of the study indicate that BITs are accepted instruments to safeguard FDI in the community of states, and BITs will remain important to private sector companies as long as no multilateral agreement emerges. Particularly small and medium-sized enterprises (SMEs) appreciate these treaties, while state contracts seem to be the most important alternative to BITs, and PRI schemes are fairly unpopular among Swiss enterprises. Although the relationship between BITs and PRI is by far not clear, it is widely acknowledged among practitioners that there is a need for comprehensive strategies, including PRIs in the first place followed by BITs as well as other international institutions.

When culture meets trade: Screen quota in Korea

This paper probes into what goes behind the publicly‐stated dichotomy of “cultural diversity” versus “pro‐competition” in the domestic battle of screen quota. Using a multi‐stakeholder model, the paper analyzes who the key players are, what interests they represent, and how much influence they wield to force the outcome to their preference. The forecasted domestic equilibrium is biased toward the status quo or the long‐term phase out, which is apparently unacceptable to the U.S. in the negotiations of the bilateral investment treaty (BIT). Consequently, the stalemate of the BIT negotiations is only natural and reasonable. The forecasting model used in this paper offers several important directions and guidelines for such strategy as the timing of decision‐making, coalition building and issue linkage.