Comparing Sustainable Development Provisions in International Investment Agreements
International Investment Agreements (IIAs) play a crucial role in integrating Sustainable Development Goals (SDGs) into foreign investments. This study analyzes the approaches taken by various regions like the EU and the Global South in incorporating sustainable development provisions in IIAs. From the EU's focus on refining IIAs to the Global South's efforts, this research offers insights into the evolving landscape of sustainable development in international investment agreements.
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Comparing Approaches to Integrate Sustainable Development Provisions in International Investment Agreements: Two Sides of the Same Coin Aditi Pandey USI Universit della Svizzera italiana, Lugano, CH
International Investment Agreements (IIAs) vis--vis Sustainable Development Goals (SDGs) Current international legal framework governing foreign investment (FDI) is a network of total 2831 IIAs and 445 treaties with Investment Provisions (TIPs) Binding obligations on states e.g.: wide-definitions, non-discrimination, min. standard of treatment, compensation, umbrella clauses, Regulatory chill effect Investor State Dispute Settlement (ISDS): unpredictable, biased towards investors Philip Morris v. Australia & Uruguay, RWE v NL, Uniper v NL, Vattenfall v. Germany, Encavis v. Italy First BIT that expressly refers to sustainable development in its preamble- Costa Rica & Netherlands (1999) which recognised that the treaty will stimulate the flow of capital and technology and sustainable development .
EU Approach Global South Approach General Application & Substantive Provisions TSD Chapters (Post Lisbon treaty, all EU TIAs contain Trade & Sustainable Development (TSD) chapters). However, not specifcally under investment chapters Extensive Reference to Sustainable Development in substantive provisions. More comprehensive approach inlcuding refining expropriation and FET standards. Potential for Progress: Different & Innovative Approaches Dispute Settlement More focus on More focus on dispute prevention and dialogue. Arbitration as the last resort. State to state dispute settlement.
Focus- EU Approach in Refining IIAs 1. EU-China CAI (2020) Pure investment agreement in contrast to other mixed agreements such as EU-Canada CETA, or EU-UK TCA. Section IV: Investment and Sustainable Development, strong commitments to promote investment in a way as to contribute to the SDGs., review of sustainablity impacts. cross-cutting provisions such as non-derogation clauses, CSR clauses and implementation of multilateral environment agreements. Specific reference to the Paris Agreement and obliges parties to implement the commitments with regards to its Nationally Determined Contributions. No ISDS, only state to state arbitration 2. EU-UK Trade and Cooperation Agreement (2020) Deviation from the traditional approach, combined chapter on services and investment, including investment promotion and liberalisation. Dedicated separate chapters on environment and climate, labour, provisions, non-regression and carbon pricing however not a part of the investment chapter. 3. EU Canada CETA (2017) Multilateral investment tribunal and appellate mechanism for the resolution of investment disputes. No specific mention of Sustainable Development Goals in investment chapter, however, parties have their right to regulate within their territories to achieve legitimate policy objectives.
Focus- Global South Approach in Refining IIAs 1. Morocco- Nigeria BIT (2016) Preambular clauses promoting and encouraging investment opportunities that enhance sustainable development within the territories of the state parties. Dedicated section on investment and environment, labour rights, impact assessment and anti-corruption. Dispute settlement through ISDS however focus on dispute prevention. 2. Pan-African Investment Code (PAIC) (2016) No fair and equitable (FET) provision In order to qualify as an investment, it must have made significant contribution to the host State s economic development. (Art. 4) State to State Arbitration 3. Brazil - India Investment Cooperation and Facilitation Treaty (2020) No fair and equitable (FET) provision and also no Most Favoured Nation Treatment (MFN) clause Focus on investment facilitation through a National Focal Point/ Ombudsman
Conclusions & Suggestions Even after facing several criticism, IIAs still an important tool to regulate FDI. EU s focus more on comprehensive trade and investment agreements, rather than just traditional investment agreements. EU could introduce further positive commitments specifically in investment chapters. Global south IIAs could include commitments under Paris Agreement in their future IIAs. Holistic and comprehensive approach towards sustainable investment must be adopted. A shift may be important to move from traditional ISDS to dispute prevention and management system. Transparency in treaty making, release of draft texts, public hearings and consultations. Sustainability review procedures ex-ante the conclusion of trade and investment agreements. Consultations between national trade, investment, environment, labor authorities.
Useful Links for Reference 1. EU-China CAI (2020): https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and- regions/china/eu-china-agreement/eu-china-agreement-principle_en 2. EU-UK Trade and Cooperation Agreement (2020): https://eur-lex.europa.eu/legal- content/EN/TXT/HTML/?uri=CELEX:22021A0430(01)#d1e17564-10-1 3. EU Canada CETA (2017): https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:22017A0114(01)#d1e2878-23-1 4. Morocco- Nigeria BIT (2016): https://investmentpolicy.unctad.org/international-investment-agreements/treaty- files/5409/download 5. Pan-African Investment Code (PAIC) (2016): https://au.int/sites/default/files/documents/32844-doc-draft_pan- african_investment_code_december_2016_en.pdf 6. Brazil - India Investment Cooperation and Facilitation Treaty (2020): https://investmentpolicy.unctad.org/international- investment-agreements/treaty-files/5912/download Thankyou Aditi.pandey@usi.ch
