Our BN government have been entering FTAs (Free Trade Agreements) - Bilateral Investment Treaties without careful consideration - and this failure will affect Malaysia and Malaysians...
Of concern is the said Investor protection clauses/section in these agreements which open the door to foreign investors to take Malaysia to international tribunals, not in Malaysia. Yes, the investor - not the foreign State government can cause Malaysia a lot of money even when Malaysia does things for the good of the people, workers, ,,,, see earlier post: By signing FTAs with Investor Protection Clauses, Malaysia has failed Malaysians
Bilateral Investment Treaties between governments ultimately seem to benefit corporations and businesses who can now take to task governments of countries they invest in for millions of dollars...
The bringing in of new policies and laws that will benefit its people can open the doors for these foreign investors to claim great damages ... on the ground that it affects the legitimate interest of businesses...profits.
Sure corporations and businesses have NO duty to ensure people, workers, etc good, livelihood, rights, health, etc is improved - it is the duty of government.
[South Bulletin 69 Article]
An epidemic of international legal suits taken by companies
against governments for billions of dollars is causing public concern
and leading to reviews of investment treaties.
By Martin Khor
A growing number of international law suits has highlighted an
emerging global crisis: the nature and effects of investment treaties
signed between governments but which are allowing private companies and
investors to sue countries for millions or even billions of dollars.
The most recent cases involving investment include a US$1.8 billion
judgment against Ecuador obtained by the U.S. oil company Occidental
Petroleum, a US$2 billion suit filed against Indonesia by a UK mining
company Churchill, cases taken against Uruguay and Australia for public
health measures by tobacco companies, suits threatened against India by
several multinational companies, and even the seizure of an Argentinian
warship in a Ghana port on behalf of a U.S. investment firm.
The law suits, which have resulted in judgments totalling many
billions of dollars against governments, were taken by companies and
investors claiming that their investments including future profits had
been affected by a range of government policies, including
non-compliance with contracts or new health, environmental or economic
measures.
Most of arbitration cases are taken up in the ICSID (International
Centre for Settlement of Investment Disputes), based in the World Bank
in Washington.
The tribunal system is widely criticised for its lack of
professionalism and transparency, its conflicts of interest and the
secrecy of its cases and outcomes.
The epidemic of cases and the high losses that governments have
suffered or will potentially suffer is giving rise to grave concerns and
calls by several governments as well as public interest groups and
legal experts to review and amend the agreements that have led to the
legal suits.
The agreements are of two main types – the bilateral investment
treaties (BITS) signed between pairs of governments (of which there are
now around 3,000) and the investment chapter contained in bilateral or
regional free trade agreements (especially those involving the United
States).
Many of these agreements have “investor-to-state” dispute systems,
under which a private company or investor can directly sue governments
in an international tribunal by claiming that their property or profits
have been “expropriated” or adversely affected by a violation of
contracts or by recent policy measures.
The following are some recent cases of legal suits taken by investors against countries:
· An ICSID tribunal in October awarded a judgment for US-based
Occidental Petroleum (Oxy) against Ecuador of US $1.8 billion, its
largest ever award, in a case taken under the U.S.-Ecuador BIT. In
addition, Ecuador has to pay $589 million in backdated compound interest
and half of the costs of the tribunal, making its total penalty around
$2.4 billion. The government had annulled a contract with Oxy because
it violated a clause that the company would not sell its rights to
another firm without permission. The tribunal agreed the violation took
place but judged that the annulment was not fair and equitable
treatment to the company. (Ben Beachy, Public Citizen Global Trade
Watch)
· The Indonesian government was sued in June for $2 billion by a
London-based mining company Churchill, which claims its right to mine in
Busang (East Kalimantan) was violated when the local government revoked
the concession rights held by a local company in which it had invested.
The government is countering the Churchill case, claiming that
Churchill did not have the correct type of mining licenses. Law Minister
Amir Syamsuddin said Churchill's acquisition of a local company broke
the law as they did not report nor get approval from the regency
government and Jakarta. Two Ministers and other senior officials will
be representing Indonesia at the case in ICSID. (Straits Times,
Singapore, 18 Sept 2012)
· The tobacco company Philip Morris sued Uruguay for alleged
breaches to the Uruguay-Swiss BIT for requiring cigarette packs to
display graphic health warnings and sued Australia under the
Australia-Hong Kong BITS for requiring plain packaging for its
cigarettes. The company claims that the packaging requirements in both
countries violates its investment, including its trademark which as an
intellectual property is an investment asset.
· The Indian government has planned to review its bilateral
investment agreements after foreign telecommunication companies gave
notice that they would take up BITS cases against India after the 2G
licenses given to them were cancelled by the Supreme Court in April
2012. The company Sistema invoked the treaty between India and Russia,
while Telenor invoked the agreement with Singapore through which the
telecom firm routed its investment, according to an Indian Express
report, which also quoted a government official: “We need to relook
clauses in such treaties in order to ensure that such an eventuality
does not happen in the future again.”
· There are two known pending cases taken in international tribunals
against Vietnam. In 2010 , U.S. businessman Michael L. Mackenzie,
filed a case claiming that Vietnamese authorities failed to protect his
investments in a resort development project in Vietnam. In 2011, the
company Dialasie SAS sued Vietnam under the France-Vietnam BIT.
Dialasie had a contract with Vietnam’s social security agency to operate
a private dialysis clinic in Ho Chi Minh City but it was closed in 2006
amidst a series of disputes with local health-care authorities.
(Source: Luke Eric Peterson, IA Reports).
· In November 2012, a US energy company Lone Pine Resources sued
Canada under the investment chapter of the NAFTA (North American Free
Trade Agreement) for $250 million because the Quebec provincial
government declared a moratorium on fracking (a method of obtaining
shale gas) and also banned drilling below the St. Lawrence River, which
the company claims is a violation of its drilling permit. (Source: The
Star, Ottawa; and Globe and Mail, 15 Nov. 2012).
The ease with which investors are able to bring and win cases against
governments for such a wide range of issues is due to the nature of the
investment agreements.
First, the definition of “investment” which is the subject of the
treaties is usually very broad, covering direct investment, portfolio
investment, loans, franchises, licenses, contracts, intellectual
property and other assets. Investors can bring up cases in claiming
that their rights to any of these have been violated.
Second, the treaties grant national treatment , “fair and equitable
treatment” and investor protection to investors. The definitions of
these are so flexible that investors are able to claim their rights are
violated for a wide range of reasons.
Third, many of the treaties prevent governments from controlling or
regulating inflows and outflows of capital, and some restrict or
disallow governments from imposing performance requirements on foreign
companies.
Fourth, the treaties prohibit expropriation of the investments. The
definition of “expropriation” is very broad; it includes direct
expropriation such as takeovers of property but also indirect
expropriation including “regulatory takings”, or the implementation of
new policy measures that affect the potential revenue and profits of the
investors. Thus, investors have sued governments for changes to or
cancellation of contracts, and for health and environmental policies and
regulations.
Fifth, some of the treaties allow for investors to directly sue
governments in international tribunals, including ICSID, the
Washington-based and World Bank-linked tribunal mentioned in most
investment treaties. These cases have caused many governments to divert
scarce time and resources to defend several cases.
Sixth, the arbitration system is riddled with major weaknesses that
are not found in normal courts. In many cases, the tribunal members are
lawyers who have also acted for investors in other cases. For example,
in the case taken by Dialasie against Vietnam, the chair of the tribunal
is a European lawyer who has also worked extensively as counsel for
investors in many other cases.
According to international trade and investment expert, Chakravarthi
Raghavan: “The ICSID panels are constituted of lawyers who sometimes
are on panel, and sometimes suing for firms against governments, and
don't have any obligation to disclose conflicts of interest. It is time
that BITs and ICSID system and these quite arbitrary, 'arbitration'
panels are exposed.”
Seventh, the BITS arbitration cases are shrouded in secrecy. They
are not held in the open, and the existence or results of cases are not
officially made known.
Eighth, it is difficult for a country to exit from a BIT even if it
has decided it is against its interests, as many BITs have a “survival
clause”; the country is bound by its provisions 10-15 years after
giving notice of exiting.
The growing number of cases could also be due to the setting up of
law firms, especially in the US and Europe, that specialise in
investment disputes, and which encourage investors to take up cases in
order to profit or benefit.
The BITs as well as FTAs’ investment component have caused outrage
among public interest groups which are concerned that these treaties
prevent or punish the implementation of required health, safety,
environmental and developmental measures.
Governments, especially in developing countries, are also
increasingly concerned. Faced with a multitude of law suits, several
governments have recently taken action to review or revise their
investment treaties.
South Africa, after completing a review of its BITS, has decided not
to sign any new BITS, will attempt to exit from or re-negotiate existing
ones, and will formulate a new model BIT.
Australia, in April 2011, announced it would not agree to including
investor-state dispute settlement provisions in its BITS and free trade
agreements.
India in April 2012 announced it is reviewing its BITS, especially
their dispute resolution component, after facing the threat of suits
arising from a Supreme Court order nullifying the award of 2G contracts
to several foreign telecommunication companies.
And some Latin American countries including Ecuador, Venezuela and
Bolivia have expressed their serious concerns about BITs and announced
their exit from ICSID.
The UN Conference on Trade and Development (UNCTAD), which has been a
major promoter of BITS, is also changing its mind about the benefits of
these treaties. It now distinguishes between the normal BITS which it
calls “agreements for freedom of investors” and a new type of BITS
which it terms “investment agreements for sustainable development”, and
it is promoting the move from the first to the second type.
With so many problems arising and so many cases being taken against
countries, the review and reform of investment treaties should be
accelerated at both national and international levels.
Martin Khor is the Executive Director of the South Centre.-
Source: The South Center website
Posts
No comments:
Post a Comment