Posts Tagged BITs

Supply chain liability and Bilateral investment treaties.

A quick note to tickle the interest of the BIT community out there: I have come across a suggestion that recent initiatives on supply chain liability (for the notion see my earlier reblog of Penelope Bergkamp’s piece) may run counter the protection of foreign investment under Bilateral investment treaties. The analysis at issue is directed at Queensland’s chain of responsibility laws. While it is clearly a law firm’s marketing pitch (heyho, we all have to make rain somehow), the issue is real: supply chain liability laws can I suppose under circumstances qualify as regulatory takings just as any other new law.

Or can they?

Geert.

 

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The TTIP and the EU’s regulatory standards: Do BITs require an environmental guarantee?

Consultancy Ecologic have released a report which they have prepared for the European Parliament. It reviews the impact which the Transatlantic Trade and Investment Partnership (TTIP) might have on the environmental ‘acquis’ of the European Union (the collected body of EU environmental law). A wide range of issues are discussed – best have a look at the report for all the details. Included are the risks associated with standing for private companies under classic BITs, which as I reported earlier, the EC have recently defended.

The report downplays the impact which the TTIP might have on ECJ case-law [‘The Court of Justice of the European Union (ECJ) has consistently held that international trade and investment agreements only have direct effect within the EU in very limited circumstances. Thus, in past ECJ cases, private companies have not normally been able to rely on e.g. WTO law for invalidating an EU action or claiming damages from the EU. This is likely to apply to TTIP as well.’] That I believe is a touch incautious. The ECJ might qualify its case-law, in particular given that the extent of integration of a trade agreement, is part of the reason for the ECJ to reject direct effect. If the TTIP eventually will include the type of deep(ish) integration forecast, the Court might well find it to have direct effect in certain circumstances.

The report suggests the EP keep a close eye on the provisions in the agreement with an impact on environmental law. This includes the type of regulatory co-operation which the TTIP might yield: a focus on process or on outcome, as neatly summarised by Simon Lester. It makes me wonder whether the Agreement might do with an Article 193 TFEU-type ‘environmental guarantee’.

Geert.

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Metamorphosis: Can an investment loose such qualification because of its negative externalities? The Philip Morris v Uruguay arbitration

Update 9 July 2016: the panel sided with Uruguay on the merits, in a move which must boost those rejecting criticism that international trade law, including BITs, MITs and TTIP, deny States’ regulatory autonomy.

A very interesting debate in the PMI v Uruguay arbitration on plain packaging. The decision on jurisdiction (which was taken in July this year) rejected the notion that an ‘investment’ under a BIT looses such qualification as a result of, in effect, its negative externalities. Uruguay had argued that PMI’s interests in Uruguay do not constitute a protected investment since not only do they fail to make any contribution to the Country’s development, but they actively prevent and interfere with such development, due to the health impact of tobacco consumption.

The Panel, having to establish its subject-matter jurisdiction, gave the notion ‘investment’ a broad meaning, in the absence of express language to the contrary in the BIT concerned. With reference to ICSID precedent, the tribunal declined to make ex-post economic /financial  evaluations determine its jurisdiction – all the more so since such business, economic, financial… ex post evaluation is subject to tit for tat data and figures.

The case will therefore continue on the merits.  Interesting material.

Geert.

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