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International Investment Treaties in South America November, 2008

International Investment Treaties in South America November, 2008. Decrease in the negotiation of IIA. Global decrease in IIA negotiations – Latin America and the Caribbean considered as the least active region 61 IIA – concluded since 2007 – until June 2008

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International Investment Treaties in South America November, 2008

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  1. International Investment Treaties in South America November, 2008

  2. Decrease in the negotiation of IIA • Global decrease in IIA negotiations – Latin America and the Caribbean considered as the least active region • 61 IIA – concluded since 2007 – until June 2008 • Only 8 IIA (aprox.) are from South American countries

  3. BIT Peru - 2007 • FTA Canada - 2008 • FTA EFTA - 2008 • FTA Canada - 2008 • FTA Singapore - 2008 South American countries with an active agenda in negotiations Colombia Peru Chile • FTA Australia - 2008

  4. Venezuela • Consent to ICSID isno available for disputes arising from mining and oil contracts • Denounced BIT with Netherlands • 7 cases in arbitration • Denounced 9 BITs from 25 • Currently consent to ICSID is no available for disputes arising from mining and oil contracts • Is woking on a Model of Investment agreement • 9 cases in arbitration • Withdraw from the ICSID – Nov 2008 • 3 cases in arbitration Countries rethinking the utility of IIA for attraction of investments Bolivia Ecuador Argentina • 46 investment treaty claims in international arbitration - December 2007

  5. Structure and Standards included in Investments Treaties

  6. Main Structure of IIA • Definition of investment – broad, including “characteristics of an investment” • Includes pre and post establishment – including in definition of investor an indication of what “seek to make an investment” mean • Tendency to negative lists but depends on the negotiation – consolidation of non conforming measures, so the States cannot introduce new measures, except for the future reservation made in the treaty.

  7. Main Standards Included • National Treatment in every stage of the investment • Inclusion of “like circumstances” in treatment clauses • Inclusion of the “Mafezzini” footnote • Fair & Equitable Treatment - reference to “customary international law”, and to the minimum standard of treatment of aliens. Including “F&E Treatment” and “Full protection and security” definitions. • Prohibition of Performance Requirements • Includes an explanation of indirect expropriation and a provision that states an exception for indirect expropriation in cases of measures adopted to protect public welfare objectives

  8. Investor – State Dispute Settlement Mechanism • Investor can claim for any breach of the obligations under the agreement, if that breach generates a loss or damage • Negotiations and consultations • Obligation of present “notice of intent” • 3 years should elapse since investor acquire knowledge of loss or damage • Fork on the road • Consent of the state for ICSID • The final and binding effect of the award

  9. Peru - Provisions to respond and coordinate internally in potential international investment disputes • Constitutes a Commission for representing the state in the dispute, since the stage of consultations – ask for information, hire lawyers, incorporate the entities involved • States the obligation of public entities to provide information if they are informed by any means of a potential investor – state dispute settlement • States the obligation of all the entities of the state to provide information regarding all contracts, agreements, etc. that includes international mechanisms of settlement of disputes clauses

  10. Different Models of IIA´s Agreements Oportunidades de Inversión

  11. UE and EFTA Model • GATT Model • Positive lists • Commercial presence - includes not only pre establishment but also “maintenance” • Less is better – Europe Style • No protection standards – just treatment • No investor-state dispute settlement mechanism • No consolidation of Non-conforming measures, possibility of inclusion of “new measure”

  12. Facing this different model • Different structure – other standards • GATT definitions • “like circumstances” / “like services” • Exceptions included in General Exceptions – no much precisions

  13. Conclusions and Future Challenges

  14. Evaluate the possibility of renegotiate old treaties • Be precise and clear in the drafting of clauses in an IIA´s • Deal with the inconsistencies of different models signed • Be internally prepared for managing disputes • Deal with the balance considered in an FTA negotiation that is different from the balance within a BIT negotiation – the negotiation of FTA´s is increasing

  15. THANK YOU

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