International investment law : understanding concepts and tracking innovations : companion volume to International investment perspectives

344 Pages·2008·2.917 MB·English

by  OECD

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 [phone]. 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 [phone], [email protected] or (for US only) to Copyright Clearance
Center (CCC), 222 Rosewood Drive, Danvers, MA 01923, USA, fax [phone], [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 with 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