Mobil v. Canada – Ratcheting Down the Scope of Treaty Reservations

As part of States’ efforts to strike a balance in their international investment agreements (IIAs) between the obligations they assume and the rights and policy space they wish to retain, some adjoin annexes to their treaties to protect their ability to take “Non-Conforming Measures” (NCMs). States have generally: used such annexes to make exceptions to non-discrimination obligations, market access restrictions and performance requirements; have included the ability to grandfather in NCMs existing at the time an IIA enters into force; and have provided for the ability to maintain, amend, and enact new NCMs in specifically identified sectors, sub-sectors, activities, or policy areas

Ripe for Refinement: The State’s Role in Interpretation of FET, MFN, and Shareholder Rights

Over recent years, many states have taken steps to refine and modernize their investment treaties. These reforms, however, are typically only included in newer treaties or model agreements. States continue to be exposed to claims, litigation, and potential damages under older “old-style” agreements. These risks are particularly acute given that tribunals have often permitted investors to “treaty shop” to obtain more favorable protections, and have also permitted investors to use the most-favored nation (MFN) provision to “import” more investor-friendly (or at least less clear) provisions from other treaties. This working paper discusses one strategy states can use to try to reduce their exposure to claims and liability under existing, “old-style” treaties. In addition to setting out the general rules regarding state practice and agreement as a means of influencing treaty interpretation, the paper (1) identifies three issues in investment treaty law — FET, MFN, and shareholder rights — that may be particularly ripe for proactive efforts by states applying this interpretive strategy; and (2) sets out a series of questions that aim to facilitate inter-state efforts to identify consensus on these controversial treaty provisions

Space for Local Content Policies and Strategies: A Crucial Time to Revisit an Old Debate

This paper explores both the role that local content measures can play in advancing sustainable development, and the impact that trade and investment treaties concluded over the past 20 years have had and will continue to have on the ability of governments to employ those tools. Certain local content measures had been restricted under the WTO due to wide agreement by negotiating parties that their costs outweigh their benefits. But the WTO also left a number of local content measures in governments’ policy toolboxes. As is discussed in this paper, however, that is changing, with the range of permissible actions for many countries being significantly smaller than it was even a decade ago. This narrowed policy space, in turn, can limit the steps governments can take to make progress on the universally adopted Sustainable Development Goals

New Weaknesses: Despite a Major Win, Arbitration Decisions in 2014 Increase the US’s Future Exposure to Litigation and Liability

In 2014, the US continued its overall record of success in defending investment treaty claims. But it did suffer losses on a number of important issues, and those losses will render the US (and its treaty parties) vulnerable to future claims, litigation expense, and liability. The US’s recent losses, which have thus far been largely ignored in commentary on the US’s experiences in investment arbitration, are highlighted in this briefing note

Inching Towards Consensus: An Update on the UNCITRAL Transparency Negotiations

From October 1-5, 2012, a working group of the United Nations Commission on International Trade Law (UNCITRAL) met in Vienna to continue work on how to ensure transparency in treaty-based investor-state arbitration. It was the working group’s fifth week-long meeting on the topic, but will not be the last. Although some issues were settled, many very significant ones remain contentious, and will be picked up again by the working group when it meets in February 2013

New UNCITRAL Arbitration Rules on Transparency: Application, Content and Next Steps

This paper discusses the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration, which were adopted in August of 2013 and went into effect on April 1, 2014. It draws on negotiating history to elaborate on the content of and purpose of each of the Rules’ provisions, and identifies options for and barriers to applying these Rules in future arbitrations

The Impact of Investment Treaties on Governance of Private Investment in Infrastructure

Governments are increasingly turning to the private sector to provide the capital, resources and/or know-how necessary for development and operation of infrastructure. In some cases, the involvement by the private sector will trigger coverage by an international investment treaty that overlies, and can override, the domestic law and contract that would otherwise be applicable to the project. This working paper discusses the circumstances affecting when an investment treaty will apply and also highlights some of the ways that investment treaties can impact governance of infrastructure development and operation. While focusing on the relationship between investment treaties and investments in infrastructure, this paper is also relevant for the connections between investment treaties and other activities involving investor-state contracts (or quasi-contractual relationships) such as investments in the extractive industries

The Transparency Rules and Transparency Convention: A good start and modelfor broader reform in investor-state arbitration

The 2014 UNCITRAL Transparency Rules and Transparency Convention are a good first step toward greater transparency in investor-state arbitrations. This Perspective encourages other institutions to follow suit and discusses how the Rules and Convention can be a model for broader reforms of the investment regime

Addressing Climate Change Mitigation and Adaptation Through Insurance for Overseas Investments: The Example of the U.S. Overseas Private Investment Corporation

In 2008, the United Nations Framework Convention on Climate Change (UNFCCC) estimated that investments of between US$540–570 billion in physical assets and other financial flows will be needed to adequately reduce global greenhouse gas (GHG) emissions to combat climate change; additionally, tens and possibly hundreds of billions of dollars may be necessary to enable countries to adapt to the phenomenon’s challenges. Through climate negotiations under the UNFCCC in Copenhagen and Cancun, developed country governments committed to provide developing countries roughly US$30 billion between 2010 and 2012 and to mobilize approximately US$100 billion per year by 2020 for climate change activities. Due to those high costs, and the relatively low sums governments are willing and able to directly provide for mitigation and adaptation, much of that funding for climate change-related efforts will have to come from the private sector. Timely mobilization of that capital will require coordination between the public and private sector to “scale up, shift and optimize” investment and financial flows contributing to climate change mitigation and adaptation. Governments must therefore adopt policies and implement tools furthering that coordination

The Mauritius Convention on Transparency: Comments on the treaty and its role in increasing transparency of investor-State arbitration

In July 2014, the United Nations Commission on International Trade Law (UNCITRAL) adopted the Mauritius Convention on Transparency that, if widely adopted, will do much to increase the transparency of investor-state arbitrations conducted under thousands of existing investment treaties and under any set of arbitration rules. This Policy Paper introduces the background and objectives of the Transparency Convention, provides commentary on each of its specific articles, and explains how the Transparency Convention can accomplish broad reform