Trends in International Investment Agreements 2009

1. International Investment Agreements in UNCTAD’s World Investment Report 2010 New York University, 11 October 2010Elisabeth Tuerk, UNCTAD Secretariat, IIA Section

2. World Investment Forum (WIF): Accra, Ghana (2008) Xiamen, China (2010) Doha, Qatar (2012) World Investment Report (WIR): 2010 20th Anniversary Edition: “Investing in a low-carbon Economy” Earlier topics included: - Agriculture (2009) - Infrastructure Challenges (2007) - Internationalization of Research & Development (2005) - Services (2004) UNCTAD Division on Investment & Enterprise – DIAEFlagships

3. UNCTAD World Investment Forum 2010 Xiamen, China

4. UNCTAD World Investment Forum 2010 Xiamen, China • 1,800 participants 120 countries & 16 international organizations: 9 heads of states, 4 heads of IOs, 79 ministerial-level officials, 116 senior business executives & > 250 other senior representatives from public & private sector • Key meetings - World Leaders Investment Summit - Ministerial Round Table - Investment Advisory Council - High Level Tripartite Conference - International Investment Agreements Conference - Sustainable Stock Exchanges - Investment Showcases

5. Table of Content: Chapter I: Global Trends in FDI Chapter II: Regional Trends in FDI Chapter III: Recent Policy Developments Chapter IV: Leveraging Foreign Investment for a low- carbon Economy Epilogue UNCTAD World Investment Report 2010

6. National Policy Developments National regulatory changes, 1992-2009 (per cent) Source: UNCTAD database on national law and regulations

7. International Investment Policies: 2009 Trends

8. The IIA Regime: 2009 Developments Trends of BITs, DTTs & other IIAs Source: UNCTAD, based on IIA database

9. IIA Regime: 2009 Developments • In 2009, 211 new concluded IIAs - 82 bilateral investment treaties (BITs) - 109 double taxation treaties (DTTs) - 20 IIAs other than BITs and DTTs. • On average about 4 new agreements per week • End of 2009: total of 5,939 IIAs: - 2,750 BITs - 2,894 DTTs - 295 other IIAs • South-South dimension: 19 of the 82 BITs between developing countries, 4 DTTs & 8 other IIAs.

10. BITs & Other IIAs:Trends in Rule-making BITs: • Mostly post-establishment & protection; • A few: pre-establishment rights (e.g. Canadian BITs); • New features to rebalance rights & obligations; Other IIAs: • Substantive investment chapters w. provisions usually found in BITs; • Limited investment-related provisions (market access/establishment); • Cooperation, e.g. creation of a consultative committee or a institutional arrangements;

11. Other Developments 2009: EU • Lisbon Treaty: certain competences for FDI were transferred from member States to the European Union. • European Court of Justice: certain BITs of three member States (Austria, Finland and Sweden) violated the European Community Treaty. • July 2010: - Communication entitled “Towards a comprehensive European international investment policy”, COM (2010) 343 final - Proposal for Regulations, COM (2010) 344 final

12. ISDS: 2009 Developments Known investment treaty arbitrations (1989-2009) Source: UNCTAD, ISDS database

13. ISDS: 2009 Developments • With 32 new initiated ISDS cases in 2009 the total raises to 357 cases; • ICSID most frequently used: 225 cases; • 81 countries involved in ISDS (end of 2009): - 49 developing countries - 17 developed countries - 15 economies in transition • 44 decisions have been rendered in 2009, raising the total number of concluded cases to 164;

14. Systemic Evolution & Transformations of the IIA Regime

15. Systemic Evolution of the IIA Regime - Review of model BITs - Termination of IIAs - Renegotiation of BITs - Modernizing treaty content - Developments in the ISDS system

16. Model BITs • Review process concluded: Russian Federation, France, Colombia, Mexico, Austria & Germany • Review process under way: Argentina, Venezuela, Ecuador, Morocco, Bolivia, South Africa, Turkey, United States • Reasons for review: - establish clearer rules - ensure consistency w. public interest - seek balance: investor & host country - adjust model to new developments

17. Termination of IIAs • Ecuador: Jan 2008: intention to withdraw: Cuba, Dom Rep, El Salvador, Guatemala, Honduras, Nicaragua, Paraguay, Romania, Uruguay • Ecuadorian Constitutional Court: 4 BITs unconstitutional (ISDS; Germany, China, Finland & United Kingdom) • Ecuador: withdrew from ICSID Convention • Bolivia: ICSID withdrawal, renegotiation of BIT w. Netherlands • Russian Federation: official notification of its intension not to become Contracting Party of Energy Charter Treaty (ECT)

18. Renegotiation of BITs • 19 BITs were renegotiated in 2009 = 1/4 of concluded BIT • Czech Republic is the most active country (15 renegotiated BIT  accession to the EU) • Several BITs have been replaced by broader economic agreements with a BIT-like chapter • Renegotiation on regional level: ASEAN replaced its investment agreement by the ASEAN Comprehensive Investment Agreement in 2009

19. Modernizing Treaty Content • Clarifying the scope of the treaty • Introducing general exceptions that allow more room for regulation by the host economies • Clarifying the scope & meaning of specific obligations • Adding environmental clauses • Ensuring appropriate corporate behavior, including with respect to environmental & social practices

20. Developments in ISDS System • Refining ISDS provisions in IIAs: - carving out certain areas from ISDS - limiting claims in certain industries/clauses - introducing a limitation period for IIA claims • Increasing legitimacy & efficiency of ISDS in IIAs - addressing frivolous claims - consolidation of claims - amicus curiae briefs - improving transparency of arbitral proceeding - making documents public (notice of intent, arbitral awards) - opening hearings to the public

21. Developments in ISDS System • Review process: - ICSID & Stockholm Chamber of Commerce: concluded - ICC & UNCITRAL: ongoing • Revision of international arbitration rules: - increasing transparency in practice (ICSID) - fostering independence & minimizing costs (ICSID) - improving effectiveness (Stockholm) • ADR & dispute prevention, avoidance & mediation polices • Domestically: - denouncing the ICSID Convention (Bolivia) - excluding sectors from ICSID arbitration (Ecuador)

22. Chapter III - Key Messages: • Rapidly growing network of IIA • Rebalancing rights & obligation in investor-State relations • combining the benefits of investment liberalization & protection with tangible contributions • Dichotomy in investment policy trends • further liberalization & promotion of FDI • regulations in pursuit of broader policy objectives

23. Possible Future Direction: Rebalancing • allowing developing countries to effectively benefit from FDI • strengthen their productive & supply capacities • maximizing business linkages • ensuring that FDI-related benefits spill over to the local economy Interaction • enhancing the interaction between IIAs & other public policy regimes

24. Creating a more Coherent, Balanced & Effective IIA Regime: • IIA language • model provisions • IIAs interpretation • options include: guidelines for arbitrators, interpretative statements, side letters, declarations, mechanisms for informal scrutiny, institutional support, appeals mechanism etc. • More coordinated & collective approach towards complex IIA issues • Multilateralism: • a tool to further common understanding

25. WIR Chapter IV: Leveraging Foreign Investment for a Low-carbon Economy IIAs & Climate Change

26. IIAs & Climate Change – double edged nature of IIAs

27. Introducing climate-friendly provisions into future IIAs low-carbon inv. promotion, environmental exceptions, institutional linkages Creating a multilateral understanding to ensure coherence of IIAs with global & national climate change policies Securing IIAs’ Contribution to Climate Change Mitigation Leveraging IIAs

28. United Nations Climate Change Conference 2010, Bonn

29. Thank you for your attention! Elisabeth.Tuerk@unctad.org