Criticizing the field of international investment law: A simple story made complex

The system of international investment law is often criticised by civil society organizations and legal academics. The Guardian recently described this system as a “legal weapon that gives corporations the edge on government”; it emphasized that there is a “growing concern among legal experts” that the investment regime “favours corporations over the public interest, puts sovereignty at stake, is chronically lacking in transparency and accountability and has been mis-sold to many developing countries that only realize exactly what they have signed up for when they get sued.”[1]

A Public Statement on the International Investment Regime, signed by a group of forty eight academics from around the world, has added, “We have a shared concern for the harm done to the public welfare by the international investment regime, as currently structured, especially its hampering of the ability of governments to act for their people in response to the concerns of human development and environmental sustainability”. [2] It argues, inter alia, that investment treaty arbitrations are unfair and unbalanced,[3] and that states should withdraw from investment treaties.[4] International investment law has even been described by a distinguished academic as “a law of greed”.[5]

Although perhaps somewhat exaggerated, these critiques are certainly not baseless. Several recent developments, most notably the disputes between tobacco giant Philip-Morris and the governments of Australia and Uruguay, indeed demonstrate how foreign investors can…

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On tuna, dolphins and all sorts of barriers

Trade lawyers’ interest in tuna and dolphins began in the early 1990s, when Mexico threw the first punch in what later became the long saga (going on 20 years now) known today as the tuna-dolphin disputes. The battleground was (and still is) the waters of the Eastern Tropical Pacific (“ETP”) Ocean, extending from California in the north to Chile in the south and Hawaii in the west. These waters are known for their abundance of sea-life, including numerous types of fish, dolphins, sharks, whales and sea turtles. Where fish are plentiful usually fisheries arise, and economic interests enter the game. This short note is written following the latest of a line of trade disputes between the United States and other states (most notably Mexico) concerning fisheries, morals and influence.

The tuna-dolphin disputes revolve around unilateral measures taken by the United States in order to combat the use of purse-seine fishing nets. Purse-seine fishing nets are used for commercial fishing. When used for tuna harvesting, not only tuna but also dolphins (and other species as well) are often trapped, injured, and even killed. It was argued by the United States that due to the use of these nets, the population of dolphins at the ETP was dramatically reduced.

Luckily for the dolphins, two types of U.S. pressure groups did not intend to let them disappear from the waters of the ETP.…

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Environmental exceptions in the future EU investment policy. Perhaps more than meets the eye?

Following the ratification of the European Union (“EU”) Treaty of Lisbon, the field of International Investment Law is now included in the EU’s common economic policy. As a major exporter and recipient of Foreign Direct Investment (“FDI”) in the global arena, it is no wonder that the EU’s ongoing deliberations over future investment policy are at the heart of contemporary academic debates.

At present, it seems that the EU Parliament aspires to push forward an innovative approach, in line with (and perhaps even further than) policies already applied by countries like Canada, under which exceptions for sustainable development goals are included.[1] This is mostly the result of concerns about “regulatory chill”, which are often mentioned by scholars (and recently also by policy makers)[2] who wish to maintain states’ flexibility to regulate future policies with respect to the protection of the environment, health, human-rights, etc. Indeed, it has been reported that Uruguay intended to relax its proposal for new anti-smoking laws following Philip Morris’ threats of investor-state litigation.[3] Similar concerns seem to have led policy makers and civil society organizations in Australia and New-Zealand to object to the inclusion of the investor-state mechanism in their investment agreements (most notably in the Trans-Pacific Partnership Agreement).[4]

But things are not so simple. The aim of these general exceptions is often to promote sustainable development goals by making states ‘untouchable’…

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Multinational Corporations, International Trade and Morality. “Do No Evil”?

The activity of multinational corporations in the international arena is an important engine of development. It is within the ability of multinational corporations to create jobs, to invest in expensive research, to transfer knowledge and technology around the world and to promote progress in many fields. Indeed the international community support such activities through the regulation of both international trade and investment. These rules are mostly designed to facilitate international economic activity by ensuring easy access to foreign markets and warranting fair treatment to aliens by host states.

The opening of borders to international activity has also brought about certain illnesses, some of which are not easy to confront. On the environmental front for example, it seems as if fears of losing economic competitiveness inhibit countries like the United States from passing a significant climate change bill. With regard to labour standards, competition for foreign investment may encourage countries to relax their labour laws and to use lower standards as an enticement for foreign economic actors. International economic activity is a complex, multilayered issue, one that touches (and often clashes with) a multitude of global issues.

A somewhat complicated relationship exists between international economic activity of multinational corporations and morality. The different concepts of moral behaviour, the notion of companies as entities that should act according to guidelines of morality (rather than just acting according to laws) and the role…

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Transparency, internet and the international investment law

A ‘small history’ was recently made in the field of international investment law when, for the first time ever, the proceedings of a certain investor-state dispute (Pac Rim Cayman LLC v. Republic of El Salvador (ICSID Case No. ARB/09/12) – Public Hearing (“Pac Rim Cayman dispute”)) were webcasted live to the general public.[1] These webcasts are now available on the International Centre for Settlement of Investment Disputes’ (ICSID) website, where visitors can entertain themselves with over 12 hours of recorded legal proceedings (including recess).[2] It is asserted in this entry that by using the online webcast technology, the parties to the Pac Rim Cayman dispute introduced a new standard of transparency into the field of international investment law. Whether this standard will be taken up by future disputants remains to be seen.

The investor-state dispute resolution process has been a long standing target for critics. Many of these critics concentrate on the lack of transparency demonstrated in the system; Indeed investor-state dispute resolution proceedings are often held in a confidential manner, where not only the public cannot follow or participate in the proceedings, but also, at least on some occasions, viewing the awards granted in these disputes is not permitted. The importance of such a webcast therefore lies first and foremost in the enhanced transparency it provides. It is, after all, only fair that the public be allowed…

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Non-Governmental Organizations: some new (very muscular) kids on the block

Non-Governmental Organizations (“NGOs”)[1] play an increasingly important role in the moulding of new international policies and their influence has grown dramatically in the last couple of decades[2]. The activity of NGOs has also become ever more international in nature,[3] as globalization has both created and revealed international issues which require the attention of the international community. Increasing international awareness of fields like human rights and environment, the establishment of powerful international organizations such as the World Trade Organization (WTO) together with improvements in sectors such as telecommunication and transportation, have all joined together and have turned the activities of international NGOs into living reality. Although not yet fully recognized as subjects of international law[4], NGOs are considered today as new emerging players in the contemporary international legal system[5].

The rising influence of NGOs brings about many questions and debates, mostly concerning democracy and representation. I would however, like to focus on another problem, one which is less of legal nature and more related to narrative, power and appearance. I would like to refer in this post to the fact that NGOs reputation as objective, impartial “watchdogs” may be improperly used by political actors and other agenda driven bodies. Political agendas, in my view, are not “wrong” and should not be excluded from the activity of NGOs. Politics and agendas are a legitimate part…

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The true nature of BITs (at least as I see it…)

On February 19-20 a conference which dealt with recent developments in the field of international investment law took place at Sydney University.[1] About sixty speakers from all around the world gathered for two intensive days of exchanging ideas, debating pressing issues and discussing what seems to be an emerging sub-field of international law. One important trend that was highly emphasised during this conference was the recognition that international investment law is far more public in nature than it was considered to be in the past. The effects of foreign investment on public interests such as the environment, human rights and labour standards are now obvious and the tension between the protection of investments on the one hand, and the governments’ interests in regulating these sensitive fields on the other, is often emphasised in academic writings and arbitration awards.

The conceptual change that international investment law seems to have gone  through has not however reached one very fundamental point. To my great surprise, speakers continually repeated the same old mantra concerning the main objective of investment treaties: the objective of investment treaties, so it was argued, is the protection of investors. This, I would argue, carries the same amount of logic as claiming that the objective of preparing a salad is cutting tomatoes. While it is true that Bilateral Investment Treaties (BITs) are designed to provide…

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International Competition Regime: New Game. New Rules?

In a recent judgment given by the Australian Federal Court, Singapore Airlines Ltd v Australian Competition and Consumer Commission ([2009] FCAFC 136 (2 October 2009)), once again the tension between increasingly globalised commercial practices on the one hand and domestic antitrust laws on the other is becoming evident. The Australian Court was required to decide whether the alleged unlawful price fixing which took place in the international markets – outside of the physical boundaries of Australia – violated Australian antitrust laws, and if so, whether the parties could be prosecuted by Australian authorities.

The Australian Court decided that international anti-competitive activity which takes place wholly outside of Australia may still influence the Australian market, and thus Australian law may possibly apply. It should be noted that this approach is by no means unique or new, as other domestic antitrust authorities are empowered by law to prosecute international anti-competitive activity.[1] But when examining the above-mentioned tension between the two conflicting forces, domestic regulation and an international problem, a more complex picture is revealed.

On the one hand, it is true that due to the lack of an international governing body or antitrust prosecution authority, the Australian authorities do not have much choice but to try and regulate international anti-competitive activity which affects Australian markets.  On the other hand, such an approach is not without…

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