Draft Treaty Language: Withdrawal of Consent to Arbitrate and Termination of International Investment Agreements

The United Nations Commission on International Trade Law (UNCITRAL) is currently working on how to reform international investment treaties, focusing in particular on those treaties’ provisions enabling investors to sue governments in international arbitration. As an observer organization in this process, CCSI has emphasized that in the context of investor-state dispute settlement (ISDS) reform, it is important to first consider what it is that investment treaties aim to achieve, and only then to consider what form(s) of dispute settlement will best advance those objectives. This means not only looking at reform of the existing ISDS mechanism, but also alternatives to it. Having identified various concerns about ISDS, UNCITRAL is now taking stock of potential reform options, and will consider this fall which options to pursue and in what order. To contribute to UNCITRAL’s work, CCSI, together with the International Institute for Environment and Development (IIED) and the International Institute for Sustainable Development (IISD), submitted this document outlining potential reform options and considerations. In line with our broader work on objectives of international investment law, the costs and benefits of the current system, alternatives to investor-state arbitration, and strategies for advancing those alternatives, in Draft Treaty Language: Withdrawal of Consent to Arbitrate and Termination of International Investment Agreements, we outline two more systemic and near-term options that states can explore to recraft their investment policies with domestic and international sustainable development objectives

International Investment Agreements: Impacts on Climate Change Policies in India, China and Beyond

Mitigating and adapting to climate change will require a fundamental reorientation of our global economy as we move away from fossil fuels and transition to a low carbon and climate-resilient world. This reorientation depends on government actions to help catalyze and channel financial flows in new directions and away from business-as-usual practices. International investment agreements (IIAs) – treaties that now number over 3,000 and have the objective of promoting and protecting cross-border investment flows_could potentially play a key role in these efforts to scale up and (re)direct investments to meet climate change mitigation and adaptation needs. As presently drafted and interpreted, however, these IIAs represent a missed opportunity to advance climate change solutions and, worse, may even frustrate them. Due to the daunting amount of investment needed for mitigation and adaptation, and the consequent mandate for governments to be strategic in closing financing gaps, it is necessary to critically assess the climate-policy consistency of IIAs and (re)shape them accordingly. This paper examines these issues. Beginning with a brief overview of IIAs and the challenges and opportunities they can pose for climate change policy generally, this paper then highlights particular challenges and opportunities these agreements pose for climate policy in China and India. When analyzing the relationship between IIAs and climate change, these two countries are important to examine because of their significant modern contributions and vulnerabilities to climate change; their active yet divergent approaches to IIAs; and their dual roles as hosts of considerable inward investment and homes to a large and growing cadre of major outward investors. The issues China and India face in terms of the intersections of climate policy and investment law are not entirely unique to them, but are especially visible. This visibility presents important examples of how current legal frameworks may hinder, but could be harnessed to advance, national action on climate change mitigation and adaptation

TransCanada Lawsuit Highlights Need to Scuttle TPP

The Obama administration is still trying, against the odds, to push the Trans-Pacific Partnership trade and investment agreement (TPP) through the lame-duck session of Congress after the November presidential vote. The administration knows that TPP can’t pass before the election because both Hillary Clinton and Donald Trump oppose it; therefore, they are hoping for a stealth Senate vote between the election and inauguration of the new president in 2017.We can therefore “thank” TransCanada for reminding us why the TPP needs to be scuttled

Clearing the Path: Withdrawal of Consent and Termination as Next Steps for Reforming International Investment Law

This is a crucial moment in international investment policymaking. Two factors have converged, calling for a new direction. First, it has become increasingly difficult to justify investor-state dispute settlement (ISDS); even governments that had been among its strongest proponents are now changing course and have raised a range of fundamental, systemic and inter-related issues relating to ISDS. Second, policy makers and other stakeholders have a greater awareness of the need to design appropriate policies to maximize the contributions cross-border investment can make to sustainable development. Influenced by these factors, various reform efforts related to investment policy are underway at the national, regional, and international levels. These discussions about reform are likely to be slow, and outcomes uncertain. In the meantime, governments and their stakeholders remain tied to an outdated system that is widely acknowledged to be ill-suited for modern investment policy objectives, with increasingly concerning consequences. This policy paper explores two near-term options that governments engaged in reform discussions can pursue, alongside longer-term work on substantive and procedural reform. These options are: (1) a joint instrument on withdrawal of consent to arbitrate; and/or (2) a joint instrument on termination. The paper examines how both options could be implemented, and makes the case for putting a pause on ISDS to ensure that investment treaties and their dispute settlement mechanisms achieve their desired ends, produce legitimate decisions, and do not undermine international economic cooperation and sustainable development more broadly. In connection with ISDS reform efforts proceeding in UNCITRAL’s Working Group III, CCSI submitted Draft Treaty Language: Withdrawal of Consent to Arbitrate and Termination of International Investment Agreements, which sets forth specific treaty language that can be used to (1) amend existing international investment agreements to withdraw consent to investor-state arbitration (leaving in place substantive protections, which can be enforced through state-state arbitration, or permits consent to investor-state arbitration on an case-by-case basis) or (2) terminate existing international investment agreements

Alternatives to Investor-State Dispute Settlement

Proponents often explain support for international investment agreements (IIAs) for their ability to: (1) promote investment flows; (2) depoliticize disputes between investors and states; (3) promote the rule of law; and (4) provide compensation for certain harms to investors – objectives of varying degrees of importance to multinational enterprises, home states, host states, and other stakeholders. While each of these objectives may seem desirable, it is important to consider what exactly they mean and whether IIAs are optimally tailored to achieve them. This two-part series aims to consider just that. In the first blog installment, we asked of investor-state dispute settlement: What Are We Trying to Achieve? Does ISDS Get Us There? To follow up, in this Working Paper we’ve considered a number of alternative tools that, when used alone or in combination, might better serve the above objectives as well as the goals of sustainable development more generally

Third-Party Rights in Investor-State Dispute Settlement: Options for Reform

The United Nations Commission on International Trade Law (UNCITRAL) is currently working on how to reform international investment treaties, focusing in particular on those treaties’ provisions enabling investors to sue governments in international arbitration. As an observer organization in this process, CCSI has emphasized that in the context of investor-state dispute settlement (ISDS) reform, it is important to first consider what it is that investment treaties aim to achieve, and only then to consider what form(s) of dispute settlement will best advance those objectives. This means not only looking at reform of the existing ISDS mechanism, but also alternatives to it. Having identified various concerns about ISDS, UNCITRAL is now taking stock of potential reform options, and will consider this fall which options to pursue and in what order. To contribute to UNCITRAL’s work, CCSI, together with the International Institute for Environment and Development (IIED) and the International Institute for Sustainable Development (IISD), submitted this document outlining potential reform options and considerations. Third Party Rights in Investor-State Dispute Settlement: Options for Reform (also available in Spanish) builds on work highlighting the impact of ISDS on access to justice for third parties, and briefly elaborates on how investor-state arbitrations can affect third parties, while also offering examples of procedural tools that states could use to better safeguard those third parties’ rights

UNCITRAL Working Group III on ISDS Reform: How Cross-Cutting Issues Reshape Reform Options

The United Nations Commission on International Trade Law (UNCITRAL) is currently working on how to reform international investment treaties, focusing in particular on those treaties’ provisions enabling investors to sue governments in international arbitration. As an observer organization in this process, CCSI has emphasized that in the context of investor-state dispute settlement (ISDS) reform, it is important to first consider what it is that investment treaties aim to achieve, and only then to consider what form(s) of dispute settlement will best advance those objectives. This means not only looking at reform of the existing ISDS mechanism, but also alternatives to it. Having identified various concerns about ISDS, UNCITRAL is now taking stock of potential reform options, and will consider this fall which options to pursue and in what order. To contribute to UNCITRAL’s work, CCSI, together with the International Institute for Environment and Development (IIED) and the International Institute for Sustainable Development (IISD), submitted this document outlining potential reform options and considerations. UNCITRAL Working Group III on ISDS Reform: How Cross-Cutting Issues Reshape Reform Options discusses at a general level how issues such as regulatory chill, investor obligations and counterclaims, the rights of non-parties, and damages – issues that were recognized by the Working Group as being important for guiding its efforts and outputs – could inform the contours of reform solutions

Draft Text Providing for Transparency and Prohibiting Certain Forms of Third-Party Funding in Investor–State Dispute Settlement

The United Nations Commission on International Trade Law (UNCITRAL) is currently working on how to reform international investment treaties, focusing in particular on those treaties’ provisions enabling investors to sue governments in international arbitration. As an observer organization in this process, CCSI has emphasized that in the context of investor-state dispute settlement (ISDS) reform, it is important to first consider what it is that investment treaties aim to achieve, and only then to consider what form(s) of dispute settlement will best advance those objectives. This means not only looking at reform of the existing ISDS mechanism, but also alternatives to it. Having identified various concerns about ISDS, UNCITRAL is now taking stock of potential reform options, and will consider this fall which options to pursue and in what order. To contribute to UNCITRAL’s work, CCSI, together with the International Institute for Environment and Development (IIED) and the International Institute for Sustainable Development (IISD), submitted this document outlining potential reform options and considerations. A Draft Text Providing for Transparency and Prohibiting Certain Forms of Third-Party Funding in Investor-State Dispute Settlement, (also available in Spanish and in French), builds on our work examining the role and implications of third-party funding, and provides draft language that could be used by states in reform instruments

The Business and Human Rights Arbitration Rule Project: Falling Short of its Access to Justice Objectives

The Hague Rules on Business and Human Rights Arbitration, initiated by the Business and Human Rights Arbitration Working Group, aims to create an international private judicial dispute resolution avenue available to parties involved in business and human rights issues, thereby helping to address the significant remedy gap faced by victims of business-related abuses. With the perspective that “international arbitration holds great promise as a method to be used to resolve human rights disputes involving business,” the Drafting Team released, in November 2018, an Elements Paper on Business and Human Rights Arbitration, as well as, in June 2019, Draft Arbitration Rules on Business and Human Rights. Both documents were released for public consultation and comment. A designated Sounding Board, of which CCSI is a member, was also consulted. With respect to the Elements Paper, CCSI submitted comments to the Drafting Team focusing on the following aspects of the Elements Paper: (1) which parties are necessary and sufficient to ensure effective access to justice of victims, including discussion of the desirable roles for both business and states, (2) the appropriate role for both international human rights law (IHRL) as well as other legal norms, and how IHRL should be interpreted and applied in this context, (3) whether model contract clauses are desirable, (4) the critical importance of choosing the appropriate appointing authority, (5) desirable qualifications of BHR arbitrators, including how they should be selected and how challenges to arbitrators should be handled, (6) how principles of transparency and access to information and effective participation should be treated, (7) the desirability of allowing amicus participation as a matter of right, and (8) principles that should govern allocation of costs, as well as a role for financial assistance for claimants and regulation of third-party funding. Following the release of the Draft Rules, CCSI published this Briefing Note and a blog, Saving the Business and Human Rights Arbitration Rule project: Put Human Rights Holders at the Heart,each of which build on our comments on the Elements Paper and elaborate certain serious concerns that CCSI has regarding the ability of the Draft Rules to advance access to justice in cases of injustices caused or perpetuated by business activity. Our comments are based on observed realities regarding both how arbitration has operated in other contexts and how companies have sought generally to avoid liability for human rights harms, as well as the steps that companies would need to take to facilitate arbitration and the enforcement of judgments against them. We suggest, among other things, that pressure devoted to seeing corporates submit to BHR Arbitration also be devoted to stopping them from undermining access to justice in domestic courts. We also note that the Draft Rules suffer from procedural and substantive gaps. As a procedural matter, we urge that, before the Draft Rules are finalized, every single one is reviewed carefully by a specific group that is representative of rights-holders and potential claimants. In terms of substance, multiple points, detailed in the above publications, also give us pause. These include, among others: the lack of anti-retaliation protections; a suggested loser-pays fee-shifting arrangement that ignores the reality of most human rights claimants; vague guidance on early dismissal of claims that could further tilt the process against rights-holder claimants; a proposal that interested third parties may need to bear the costs of their participation, which may effectively skew such participation away from all but corporate third parties; and suggestions on interim measures that could place unfathomable responsibility on human rights victims

Trade in the balance: reconciling trade and climate policy: report of the Working Group on Trade, Investment, and Climate Policy

This repository item contains a report published by the Working Group on Trade, Investment, and Climate Policy at The Frederick S. Pardee Center for the Study of the Longer-Range Future at Boston University, and the Global Economic Governance Initiative at Boston University.This report outlines the general tensions between the trade and investment regime and climate policy, and outlines a framework toward making trade and investment rules more climate friendly. Members of the working group have contributed short pieces addressing a range of issues related to the intersection of trade and climate policy. The first two are by natural scientists. Anthony Janetos discusses the need to address the effects of international trade on efforts to limit the increase in global annual temperature to no more than 2oC over preindustrial levels. James J. Corbett examines the failure of the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) to adequately address the environmental implications of shipping and maritime transport. The next two pieces are by economists who examine economic aspects of the trade-climate linkage. Irene Monasterolo and Marco Raberto discuss the potential impacts of including fossil fuel subsidies reduction under the TTIP. Frank Ackerman explores the economic costs of efforts to promote convergence of regulatory standards between the United States and the European Union under the TTIP. The following two contributions are by legal scholars. Brooke Güven and Lise Johnson explore the potential for international investment treaties to redirect investment flows to support climate change mitigation and adaptation, particularly with regard to China and India. Matt Porterfield provides an overview of the ways in which both existing and proposed trade and investment agreements could have either “climate positive” or “climate negative” effects on mitigation policies. The final article is by Tao Hu, a former WTO trade and environment expert advisor for China and currently at the World Wildlife Fund, arguing that the definition of environmental goods and services’ under the WTO negotiations needs to be expanded to better incorporate climate change