1. The IISD Model International Agreement on Investment for Sustainable Development: 1 st ANNUAL FORUM OF DEVELOPING COUNTRY INVESTMENT NEGOTIATORS Singapore October, 2007 The IISD Model International Agreement on Investment for Sustainable Development: 1 st ANNUAL FORUM OF DEVELOPING COUNTRY INVESTMENT NEGOTIATORS Singapore October, 2007 Howard Mann Senior International Law Advisor International Institute for Sustainable Development www.iisd.org/investment

2. Agenda An introduction to IISD’s Model International Agreement on Investment for Sustainable Development An introduction to IISD’s Model International Agreement on Investment for Sustainable Development Discussion of the approach (preamble, objectives, scope) Discussion of the approach (preamble, objectives, scope) Discussion of the rights and obligations Discussion of the rights and obligations Discussion of Dispute Settlement and Institutions Discussion of Dispute Settlement and Institutions

3. IISD’s Approach IISD’s approach: Investment Agreement for Sustainable Development: defined purpose, matching tools Investment Agreement for Sustainable Development: defined purpose, matching tools Focus on quality, not quantity (never worked) Focus on quality, not quantity (never worked) Need to clearly change balance in interpretation from investor rights only Need to clearly change balance in interpretation from investor rights only Comprehensive: Expressly include rights and obligations of foreign investors, host states and home states Comprehensive: Expressly include rights and obligations of foreign investors, host states and home states Preamble, objectives, express need for a balanced approach Preamble, objectives, express need for a balanced approach

4. ScopeScope: More restrictive definition of an “investment” More restrictive definition of an “investment” enterprise based, services and non-services, broad range of legal forms enterprise based, services and non-services, broad range of legal forms no IPRs per se, no portfolio investment no IPRs per se, no portfolio investment Investor: controlling interest is main focus Investor: controlling interest is main focus Post establishment rights only Post establishment rights only Pre-establishment (rights of establishment): Pre-establishment (rights of establishment): Mechanism for states to list sectors they choose to open, but no obligations to keep them open (services and non-service sectors) Mechanism for states to list sectors they choose to open, but no obligations to keep them open (services and non-service sectors) Once an investment IS made, it remains protected by post establishment rules Once an investment IS made, it remains protected by post establishment rules

5. Rights and Obligations Traditional model: Traditional model: RightsObligations ForeignInvestorX Host state X Home state X

6. Rights and Obligations IISD Model Agreement: six sets of interacting rights and obligations IISD Model Agreement: six sets of interacting rights and obligations RightsObligations ForeignInvestorXX Host state XX Home state XX

7. For. Investor Rights and Obligations RightsObligations ForeignInvestor Good governance agenda for investors, investment National treatment National treatment Most favoured nation Most favoured nation Minimum international standards Minimum international standards No expropriation w/o compensation No expropriation w/o compensation Senior management Senior management Transfer of assets Transfer of assets IISD: IISD: More developed text, less room for vagueness More developed text, less room for vagueness “Minimalist” language does not mean minimalist obligations, has led to expansive interpretations “Minimalist” language does not mean minimalist obligations, has led to expansive interpretations e.g. on expropriation, NT e.g. on expropriation, NT Comply with local laws Comply with local laws Pre-establishment impact assessment Pre-establishment impact assessment Anti corruption Anti corruption Environmental management/international environmental obligations Environmental management/international environmental obligations Human rights protection Human rights protection Core labour standards Core labour standards Provision and publication of information Provision and publication of information CSR CSR Investor liability Investor liability Tie it to investor-state for enforceability Tie it to investor-state for enforceability DO WE HAVE ENOUGH? DO WE HAVE ENOUGH?

8. Host State Rights and Obligations RightsObligations Host State Good governance agenda for host state, investment Inherent right of states to regulate, articulate development policy Inherent right of states to regulate, articulate development policy Right to performance requirements (exception from national treatment) Right to performance requirements (exception from national treatment) Investment promotion Investment promotion Access to investor information Access to investor information Procedural fairness Procedural fairness Maintenance of environmental standards, labour standards Maintenance of environmental standards, labour standards Minimum standards for: environmental assessment, core labour, human rights Minimum standards for: environmental assessment, core labour, human rights Anti-corruption Anti-corruption Publication of information Publication of information Subsidies for foreign Investors Subsidies for foreign Investors (Correlate to investor rights)

9. Home State Rights and Obligations RightsObligations Home State Role in good governance of foreign investment Claim protection of investor rights in dispute settlement Claim protection of investor rights in dispute settlement Assistance to facilitate foreign investment Assistance to facilitate foreign investment Provide information on investors Provide information on investors Ensure procedural laws allow for hearing on investor liability Ensure procedural laws allow for hearing on investor liability Anti-corruption Anti-corruption

10. Institutions IISD approach at multilateral level IISD approach at multilateral level National authorities National authorities Contact Contact OECD Guidelines type complaint role OECD Guidelines type complaint role Conference of the Parties Conference of the Parties Secretariat Secretariat Technical assistance committee Technical assistance committee Financial mechanism Financial mechanism Dispute settlement body: oversee arbitration process like in WTO Dispute settlement body: oversee arbitration process like in WTO Legal Assistance Centre Legal Assistance Centre

11. Dispute settlement: IISD Approach Goal: Transparent and Accountable; Subject to Rule of Law Standing panel of arbitrators who do not act as lawyers Standing panel of arbitrators who do not act as lawyers Appeals process (WTO model) Appeals process (WTO model) Prevent multiple claims Prevent multiple claims Restore exhaustion of local remedies (with “out”) Restore exhaustion of local remedies (with “out”) Breaches of obligations can be raised by host states as a defense, mitigation or to cancel investor rights Breaches of obligations can be raised by host states as a defense, mitigation or to cancel investor rights Corruption can be raised to vitiate investor rights in relation to an investment Corruption can be raised to vitiate investor rights in relation to an investment Transparency Transparency Public access to all written materials, hearings Public access to all written materials, hearings “Amicus curiae” submissions “Amicus curiae” submissions Full Annex with procedures, rules, standards for arbitrators, etc Full Annex with procedures, rules, standards for arbitrators, etc