1. Introduction to Investment Treaties and Health Benn M c Grady, PhD O’Neill Institute for National and Global Health Law Georgetown University Law Center bm363@law.georgetown.edu

2. Outline 1.Background and rationales for investment treaties 2.Standards of protection 3.Contemporary treaty practice Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

3. 1 Background and rationales Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

4. 1 International investment agreements Primarily bilateral (bilateral investment treaties (BITs) or investment chapters in FTAs) Function is to protect assets of nationals when invested abroad Investors have standing to bring claims against states under international law Claims are settled through arbitration (ICSID and UNCITRAL) Awards are enforced under domestic law Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

5. 1 Rationales Capital exporting countries seek IIAs to secure the assets of their nationals, when invested abroad. IIAs are often sought with countries perceived to have ‘weak’ legal systems so that foreign investors can bypass domestic courts. For countries hosting foreign investment (host states) an IIA may make their countries more attractive to foreign investors. Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

6. Plain packaging claim Referred to in Guidelines to the WHO FCTC Implemented by Australia Challenged by Philip Morris under an investment treaty on the basis that it expropriates property rights and is unreasonable Trade, Investment and Non- Communicable Diseases

7. Uruguayan packaging claim Graphic warnings covering 80% of the surface A ban on misleading branding, including brand variants Challenged by Philip Morris under an investment treaty on the basis that it expropriates property rights and is unreasonable Trade, Investment and Non- Communicable Diseases

8. 2 Standards of protection Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law

9. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Common standards Protection against expropriation or nationalization Guarantee of ‘fair and equitable treatment’ National Treatment Most-favored nation treatment Compliance with commitments to investors (umbrella clauses)

10. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Expropriation Typically, it is permissible to expropriate for a public purpose, provided that the act is non- discriminatory and compensation is paid. Different clauses are interpreted in a similar manner. Direct expropriation occurs if title to property is taken. Indirect expropriation may occur if government action tantamount or equivalent to expropriation occurs.

11. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Expropriation There is a line between legitimate government intervention that is non-compensable and measures equivalent to expropriation. 1.Is there a substantial interference with property rights? 2.If so, are other factors relevant? The reasonable expectations of the investor The character of a measure Proportionality to the objective in light of interference with property rights Whether a measure is a valid exercise of sovereign police powers to regulate in the public interest

12. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Fair and equitable treatment FET clauses differ significantly in their terms. Some clauses import a standard from customary international law. Other clauses set out an autonomous standard of treatment. Although debates exist about the substance of the two standards, it is generally recognized as more difficult for an investor to establish violation of the customary standard.

13. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Non-discrimination National treatment clauses prohibit less favorable treatment of foreign investors or investments than of like domestic investors or investments. Most-favored nation treatment prohibits less favorable treatment of nationals of the contracting parties than of nationals of third countries. MFN clauses are often invoked to require higher standards of treatment found in other bilateral treaties to which a host state is a party.

14. 2 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Umbrella clauses Umbrella clauses require host states to respect commitments made to investors. These clauses make contracts and other commitments part of the applicable law of the arbitration.

15. 3 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Contemporary treaty practice

16. 3 Introduction to Trade and Health Benn McGrady, PhD O’Neill Institute for National and Global Health Law Clarifying regulatory authority Exemptions for specific classes of investments Annexes clarifying the definition of indirect expropriation Annexes clarifying use of the customary standard of treatment in FET clauses (or the standard of protection itself) Clarifications concerning the scope of MFN clauses General exceptions