Member States and civil society examine questions raised at 2014 World Investment Forum

26 March 2015

​Reform of the International Investment Agreements (IIA) regime returned to the UNCTAD agenda during a three day Expert Meeting in February, with member States and civil society calling for new approaches to drafting and implementing the agreements.

The Expert Meeting, held from 25 to 27 February, took up issues raised at the 2014 World Investment Forum when many member States and civil society representatives argued that there is a need to rebalance the IIA system in a way that would strengthen countries' right to regulate, foster responsible business conduct and improve international investment dispute settlement.

Representatives of civil society, academia and the private sector participated in the meeting, which included 17 interactive breakout sessions on the key aspects of the IIA regime. The sessions covered the substantive content of IIAs; the sustainable development dimension of IIAs; tools for modernising the IIA framework, and investor state dispute settlement (ISDS).

Participants discussed the risks for host countries of entering into International Investment Agreements, notably those arising from the highly controversial investor-State dispute settlement mechanism, which allows investors to challenge host governments, including for public interest regulation. Participants identified concrete strategies and action points that will help shape a sustainable-development friendly international investment framework and improved global investment governance.

Expert Meeting on the Transformation of the IIA Regime
Opening Plenary, 25 February 2015
 

Giorgios Altintzis, Policy Adviser at the International Trade Union Federation, said that in the absence of a global debt restructuring mechanism, IIAs had been used to deal with investment protection in cases of debt restructuring. One country was facing an investor-state claim from a foreign bank, after it changed the terms of its sovereign bonds to comply with IMF bailout conditions. Altintzis said this was "highly problematic" and would favour foreign investors over domestic investors.

Nathalie Bernasconi, Director of Economic Law and Policy at the International Institute for Sustainable Development, said there were "diverse paths to reform" of the IIA regime. She emphasised the need to balance investor guarantees with the risk of unintended consequences for the host country. Many investor guarantees could be upheld by domestic laws, without the need for an international treaty, she said.

Mariana Hernandez Crespo, legal scholar at the University of St. Thomas also said that escalating disputes to arbitration or an international court was not always ideal: "It would be the equivalent to having a brain surgery when someone actually complains about having a headache," she said.

Legal protection for host countries was in the spotlight at a breakout session on Public Policy Exceptions. Sanya Reid Smith, Legal Advisor at the Third World Network, argued that a broad "general exception" should be included in IIAs, to give host countries the regulatory flexibility to pursue public interest objectives in different sectors. In the past, listing out specific health and environmental exceptions had prevented host countries from including new sectors, such as e-commerce, and also had a low success rate at international tribunals.

Shaun Donnelly, Vice president at the US Council for International Business, said that there were considerable differences among Bilateral Investment Treaties. Recent US BITs included strong transparency provisions while still providing essential protections for investors, he said.

Closing the meeting, James Zhan, Director of UNCTAD's Division for Investment and Enterprise welcomed the number of concrete solutions that were heard at the meeting providing, he said, a "toolbox" for countries that want to reform their IIAs.

A Chairman's summary, reflecting the debates at the plenary sessions and breakout sessions, will be published in due course. The meeting's media center offers plenty of information on the discussions held in the various sessions, and during the World Investment Forum.