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International Investment Law: Understanding Concepts and Tracking Innovations: A Companion Volume to International Investment Perspectives PDF

344 Pages·2008·2.68 MB·English
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International Investment Law UNDERSTANDING CONCEPTS AND TRACKING INNOVATIONS International A Companion Volume to International Investment Perspectives Investment Law International investment agreements set ground rules for how host governments treat foreign investors. This publication provides an unparalleled source of information on UNDERSTANDING CONCEPTS four key issues: the definition of investor and investment; the interpretation of umbrella clauses in investment agreements; coverage of environmental, labour and anti-corruption In AND TRACKING INNOVATIONS issues; and the interaction between investment and services chapters in selected te r regional trade agreements. n a t The “Definition of investor and investment” reviews the determinants of the scope io n of application of international investment treaties in light of recent state practice and a jurisprudence. The article on the “Interpretation of the umbrella clause in investment l In A Companion Volume to International Investment Perspectives agreements” sheds light on a controversial provision whose meaning has been disputed ve s recently before international arbitral tribunals. “International Investment Agreements: t m A survey on environmental, labour and anti-corruption issues” reviews the treatment e of societal issues in 295 investment agreements and in related arbitration decisions. nt “The interaction between investment and services chapters in selected regional trade L a agreements” looks at the implications for investment protection and liberalisation w of 20 treaties’ investment and services chapters. U N D E R S T A N D IN G C O N C E P T S A N D T R A C K IN G IN The full text of this book is available on line via this link: N O www.sourceoecd.org/finance/9789264042025 V A T Those with access to all OECD books on line should use this link: IO www.sourceoecd.org/9789264042025 NS SourceOECD is the OECD’s online library of books, periodicals and statistical databases. For more information about this award-winning service and free trials, ask your librarian, or write to us at [email protected]. ISBN 978-92-64-04202-5 -:HSTCQE=UYWUWZ: 20 2008 01 1 P www.oecd.org/publishing International Investment Law UNDERSTANDING CONCEPTS AND TRACKING INNOVATIONS Companion Volume to International Investment Perspectives ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 30 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The Commission of the European Communities takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. Also available in French under the title: Le droit international de l’investissement COMPRENDRE LES CONCEPTS ET SUIVRE LES INNOVATIONS Complément aux Perspectives de l’investissement international Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda. © OECD 2008 No reproduction, copy, transmission or translation of this publication may be made without written permission. Applications should be sent to OECD Publishing [email protected] or by fax 33145249930. Permission to photocopy a portion of this work should be addressed to the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, fax 33146346719, [email protected] or (for US only) to Copyright Clearance Center (CCC), 222 Rosewood Drive, Danvers, MA 01923, USA, fax 19786468600, [email protected]. FOREWORD Foreword I nternational Investment Law: Understanding Concepts and Tracking Innovations is a companion volume to International Investment Perspectives. The present volume is the second edition of the International Investment Law series. It follows the 2005publication of International Investment Law: AChanging Landscape. This publication is part of the OECD Investment Committee’s continuing effort to enhance common understanding and to improve outcomes of international investment agreements by providing analysis of core provisions and of critical legal issues arising out of their interpretation and application. International investment agreements are key instruments of co-operation for the promotion, protection and liberalisation of foreign investment. Their proliferation, including South-South treaties and investment chapters in regional integration agreements, the increase in the number of investment disputes and the emergence of new legal issues in this context are all factors which have contributed to the complexity of the legal framework for foreign investment. This publication consists of four surveys on: i)the definition of investor and investment; ii)the interpretation of umbrella clauses; iii)“societal” issues in investment treaties (mainly environmental, labour, human rights and anti- corruption); and iv)the interaction between investment and services chapters in selected regional trade agreements. The present publication sheds light on some of the recent issues that have arisen in connection with certain substantive provisions of international investment agreements. The common theme of the four papers is the international investment community’s search for greater clarity in the interpretation of concepts and in the language used in these treaties. In some cases, the surveys also track innovations in treaty language and in arbitral decisions. As a collection of factual surveys, the publication does not necessarily reflect the views of the Organisation for Economic Co-operation and Development or those of its member governments. It cannot be construed as prejudging ongoing or future negotiations or disputes arising out of international investment agreements. INTERNATIONAL INVESTMENT LAW: UNDERSTANDING CONCEPTS AND TRACKING INNOVATIONS – ISBN 978-92-64-04202-5 – © OECD 2008 3 TABLE OF CONTENTS Table of Contents Chapter 1. Definition of Investor and Investment in International Investment Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Annex 1.A1.Definition of Investment in Bilateral Investment Treaties . . . 79 Chapter 2. Interpretation of the Umbrella Clause in Investment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Annex 2.A1.Examples of Umbrella Clauses. . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Annex 2.A2.2004USModel Bilateral Investment Treaty. . . . . . . . . . . . . . . . 133 Chapter 3. International Investment Agreements: Asurvey of Environmental, Labour and Anti-corruption Issues . . . . . 135 Annex 3.A1.Methodology and List of IIAs Included in Survey . . . . . . . . . . . 162 Annex 3.A2.Inventory of Environmental, Labour and Anti-corruption Texts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Annex 3.A3.A Fact-finding Survey of the Social Content of Non-OECD International Investment Agreements. . . . . . . . 229 Annex 3.A4.Methodology and List of BITs Included in Survey. . . . . . . . . . . 236 Chapter 4. The Interaction Between Investment and Services Chapters in Selected Regional Trade Agreements. . . . . . . . . . . . . . . . . . 241 Annex 4.A1.Key Features of the RTAs Reviewed . . . . . . . . . . . . . . . . . . . . . . 301 Annex 4.A2.Analysis of the Schedules of Commitments: Methodology, Caveats and Summary Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . 324 Annex 4.A3.The GATS W/120 Services Sectoral Classification List . . . . . . . 333 INTERNATIONAL INVESTMENT LAW: UNDERSTANDING CONCEPTS AND TRACKING INNOVATIONS – ISBN 978-92-64-04202-5 – © OECD 2008 5 ISBN 978-92-64-04202-5 International Investment Law: Understanding Concepts and Tracking Innovations © OECD 2008 Chapter 1 Definition of Investor and Investment in International Investment Agreements* The definition of investor and investment is key to the scope of application of rights and obligations of investment agreements and to the establishment of the jurisdiction of investment treaty-based arbitral tribunals. This factual survey of state practice and jurisprudence aims to clarify the requirements to be met by individuals and corporations in order to be entitled to the treatment and protection provided for under investment treaties. It further analyses the specific rules on the nationality of claims under the ICSID Convention. As far as the definition of investment is concerned, most investment agreements adopt an open- ended approach which favours a broad definition of investment. Nevertheless recent developments in bilateral model treaties provide explanatory notes wit h further qualifications and clarifications of the term investment. The survey further reviews the definition of investment under ICSID as well as non-ICSID case-law for jurisdictional purposes. ∗ This survey was prepared by CatherineYannaca-Small, Investment Division, OECD Directorate for Financial and Enterprise Affairs. LahraLiberti, Investment Division, OECD Directorate for Financial and Enterprise Affairs prepared SectionII of PartII and revised the document in light of the discussions in the OECD Investment Committee. This paper is a factual survey which does not necessarily reflect the views of the OECD or those of its member governments. It cannot be construed as prejudging ongoing or future negotiations or disputes arising under international investment agreements. 7 1. DEFINITION OF INVESTOR AND INVESTMENT IN INTERNATIONAL INVESTMENT AGREEMENTS Executive summary The definition of investor and investment are among the key elements determining the scope of application of rights and obligations under international investment agreements. There are two types of investors: natural and legal persons. For natural persons, investment agreements generally base nationality exclusively on the law of the state of claimed nationality. Some investment agreements also introduce alternative criteria, such as a requirement of residency or domicile. The issues related to the nationality of legal persons are more complicated. Companies today operate in ways that can make it very difficult to determine nationality. Tribunals have usually adopted the test of incorporation or seat rather than control when determining the nationality of a juridical person, unless the test of control is provided for in the agreement. Accordingly, it is the general practice in investment agreements to specifically define the objective criteria which make a legal person a national, or investor, of a Party, for purposes of the agreement. When the objective criteria used may include investors to whom a Party would not wish to extend the treaty protection, some treaties include “denial of benefits” clauses allowing exclusion of investors in certain categories. The ICSID Convention, the main instrument for the settlement of investor-state disputes, limits the jurisdiction of its Centre to disputes between one Contracting State and a national of another Contracting State. It provides specific rules on the nationality of claims. For natural persons, it requires nationality to be established on two important dates: the date of consent to arbitration and the date of registration, and does not cover dual nationals when one of the nationalities is the one of the other Contracting State party to one dispute. The ICSID jurisprudence as to the nationality of natural persons is so far limited to four cases brought by dual nationals. For legal persons, the ICSID Convention requires nationality to be established only on the date on which the parties consented to submit such dispute to arbitration and allows a departure from the principle of incorporation or seat, when the Parties agree to treat a legal entity with the nationality of the Contracting State as a national of another Contracting State because of foreign control. Arelated issue is the question of the extent to which shareholders can bring claims for injury sustained by the corporation. Recent jurisprudence has 8 INTERNATIONAL INVESTMENT LAW: UNDERSTANDING CONCEPTS AND TRACKING INNOVATIONS – ISBN 978-92-64-04202-5 – © OECD 2008

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International investment agreements set ground rules for how host governments treat foreign investors. This companion volume to International Investment Perspectives provides an unparalleled source of information on four key issues: the definition of investor and investment; the interpretation of
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