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Recent Developments in International Investment Agreements and the
Right of States to Regulate: 2007–2008
Mahnaz Malik, International Institute for Sustainable Development
This paper is provided as part of a series as background documents for the 2nd Annual Forum for Developing Country Investment Negotiators, held in Marrakech, Morocco, 2–4 November 2008. The event was organized by the International Institute for Sustainable Development in partnership with the South Centre and the Moroccan Department of Investment. Support for the Forum has been generously provided by the Danish Ministry of Foreign Affairs, the International Development Research Centre and the Norwegian Agency for Development Corporation. The International Institute for Sustainable Development (IISD) (www.iisd.org) is a Canadian‐based not‐for‐profit organization. As a policy research institute dedicated to effective communication of our findings, we engage decision‐makers in government, business, NGOs and other sectors in the development and implementation of policies that are simultaneously beneficial to the global economy, the environment and social well‐being. IISD’s work on investment seeks to promote investment as a means to achieve sustainable development. Our balanced and insightful approach is reflected in our widely circulated Investment Treaty News bulletin, and our solid expertise has persuaded tribunals in two cases (under ICSID and UNCITRAL) to grant us precedent‐setting standing to intervene in investor‐state disputes with broad public policy implications. We have been engaged to act as advisors to several developing countries in the course of their ongoing investment negotiations. Our work includes the drafting of a Model Agreement on Investment for Sustainable Development, which has won widespread critical acclaim. The South Centre (www.southcentre.org) is an intergovernmental organization of developing countries established by the 1994 Intergovernmental Agreement to Establish the South Centre (deposited with the UN Secretary‐General) which came into force on 31 July 1995. The South Centre currently has 50 developing country Member States. It has its headquarters in Geneva. The South Centre seeks to meet the need for analysis of development problems and experience, as well as to provide policy analysis and research support required by developing countries for collective and individual action, particularly in the international arena. The South Centre’s primary objectives include the promotion of: developing country (South) solidarity and cooperation on development issues; South‐wide collaboration in promoting common interests and coordinated participation by developing countries in international forums dealing with South‐South and North‐South matters, as well as with other global concerns; convergent views and approaches among countries of the South with respect to global economic, political and strategic issues related to evolving concepts of development, sovereignty and security; and better mutual understanding and cooperation between the South and the North on the basis of equity and justice. To meet its objectives, and within the limits of its capacity and mandate, the South Centre responds to requests for policy advice, and for technical and other support from collective entities of the South such as the Group of 77 and the Non‐Aligned Movement. These functions are carried out by means of policy‐oriented research and analysis, negotiations support and technical assistance, and capacity‐building, and by publishing and disseminating widely the results of its work. The South Centre’s main areas of policy expertise include trade, intellectual property, climate change, investment, finance, agriculture and services. The Department of Investment has been in charge of promoting foreign investment in Morocco since 1996. Beyond its mandate to provide information on the country’s potential, the Department creates and implements investment promotion strategies targeting specific sectors to promote the realization of projects. Its plan of action revolves around four main axes: •Identifying different categories of investors and countries initiating foreign investment; •Promoting priority sectors such as tourism, NTIC , electronic and automobile components, textiles, aeronautics and the agro‐alimentary industry; •Coordinating between national institutions and international organizations in the field of investment; and •Locating projects according to the opportunities offered in the different regions of Morocco, in collaboration with the Regional Investment Centres. In order to further the government’s investment policy, while carrying out its mission, the Department of Investment is organized along two main poles, namely cross‐sectional and sector‐oriented: •Two divisions cover investment promotion, communication and cooperation, research and regulations; •Two other divisions are dedicated to activities in priority sectors, agriculture and industry on one hand, tourism and services on the other. To maximize efficiency, these structures benefit from the support of offices in charge of human resources and general affairs. The Department of Investment, along with its initial mandate, also steers the Inter‐Ministerial Investment Commission, an appeal and arbitration body presided by the Prime Minister. The Department of Investment plans to establish an independent agency dealing specifically with promotion in early 2009.
1
Second Annual Forum of Developing Country Investment Negotiators
3-4 November 2008
Marrakech, Morocco
Recent Developments in International Investment Agreements and the Right of
States to Regulate: 2007-2008
Mahnaz Malik
1. Introduction
This paper provides an update to “Investment Agreements and the Regulatory State:
Can Exceptions Clauses Create a Safe Haven for Governments?” written by Howard
Mann1 by examining the findings in recent international investment agreements (IIA)
awards relating to expropriation and the right of states to regulate2. It also identifies
developments in the drafting of expropriation provisions in IIAs which explicitly
provide states with the policy space to take regulatory measures in the public interest.
2. The Expropriation Provision in IIAs and the Ability of State to Regulate
The provision requiring governments to compensate investors in the event that their
investment is „expropriated‟ is present in virtually all IIAs. While it may be important
to protect investors from capricious and discriminatory government actions, if IIAs
1 Issues in International Investment Law Background Papers for the Developing Country Investment
Negotiators‟ Forum Singapore, October 1-2, 2007 2 The paper reviews the awards rendered in 2007 and 2008, which are available on the ICSID website
(www.worldbank.org/icsid) listed in Annex A
2
require compensation for foreign investors in order for governments to take otherwise
appropriate new regulatory measures affecting them, then this will certainly have a
major impact on the ability of governments to regulate in the public interest.
The issue, in a nutshell, is whether bona fide regulatory measures such as those to
protect the environment, human health or safety can be considered as expropriations
and thus require compensation under the expropriation clause? The existing arbitral
decisions go in two separate and irreconcilable directions. Some say the key element
is the economic impact of the measure, irrespective of its motivation (Metalclad v.
United States3, TECMED v. Mexico
4). Others say that genuine regulatory measures
fall within the customary international law concept of “police powers” and do not
constitute expropriatary measures (Methanex v. United States5).
These awards reflect the current uncertainty in exactly what would constitute a
measure equivalent to expropriation or an indirect expropriation and therefore attract
compensation, even if it is taken for the public good. This lack of clarity presents a
number of risks for host governments in adopting new measures.
3. Recent Awards Ruling on Expropriation
In 2007, of the 24 IIA awards publicly available, 10 were awards on the merits (7 of
which were awarded in favor of the investor's claim). 7 out of these 10 awards on the
3 Metalclad Corporation v. The United Mexican States (ICSID Case No. ARB(AB)/97/1)
4 Técnicas Medioambientales Tecmed, S.A. v. United Mexican States, ICSID Case No. ARB
(AF)/00/2. (Spain/Mexico BIT) 5 Methanex Corporation v. United States of America, In the Matter of An Arbitration under Chapter 11
of the North American Free Trade Agreement and the UNCITRAL Arbitration Rules, Final Award of
the Tribunal, August 7, 2005. Available at http://www.naftaclaims.comdisputes_us_6.htm.
3
merits last year involved the expropriation provision. In 2008, the much talked about
Biwater v Tanzania decision6 involved a consideration of the expropriation provision,
and is discussed below.
The majority of the IIA awards in 2007 focused on the degree of interference with the
rights of ownership that is required for an act or a series of acts to constitute an
indirect expropriation. The awards reviewed are listed in Annex A.
For example, in Sempra v. Argentine Republic7
, the investor, Sempra, had
complained that its investments in two Argentine gas distribution enterprises had
suffered serious damage as a result of several emergency measures taken by
Argentina during and after its financial crisis. The investor‟s arguments included that
compensation must be paid irrespective of the purpose of the measures taken. On the
other hand, the state argued that the purpose of the measures was relevant to the
determination of an expropriation claim, particularly if such measures are adopted under
the police power of the state and are proportional to the requirements of public interest.
The tribunal in this case chose to first focus on the degree of the impact required to
establish expropriation, and held that the effects on the investment were not sufficient
to meet the threshold. It held that “that in order for a claim of indirect expropriation
to be successful it would be required that “the investor no longer be in control of its
business operation, or that the value of the business has been virtually annihilated”.
As this was not the case in the present dispute, the tribunal rejected the investor‟s
expropriation claim. However, the tribunal did find that Argentina had breached the
fair and equitable provisions, and denied Argentina a defence of necessity both as a
6 Biwater Gauff (Tanzania) Ltd. v.United Republic of Tanzania,ICSID Case No. ARB/5/22
7 Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16 (Argentina-United
States BIT), Award, 28 September 2007.
4
matter of customary international law and under Article 11 of the US-Argentina
bilateral investment treaty.
Similarly, in PSEG v. Turkey8 when examining the investor‟s claim for indirect
expropriation, the tribunal did not find that the threshold of interference that had taken
place satisfied its test, and therefore it rejected the investor‟s claim of indirect
expropriation. The tribunal did award PSEG damages for breach of the fair and
equitable provision. The tribunal in Eastern Sugar v. Czech Republic9 noted that a
violation of the expropriation clause in the BIT would be applicable only if there was
“a substantial deprivation of the entire investment or a substantial part of the
investment.” As such deprivation had not even been alleged by the claimant, the
tribunal rejected the expropriation claim.
In Siemens v Argentine Republic10
, the investor, Siemens, argued that irrespective of
whether or not the purpose of a state measure affects its legality, it does not affect the
state‟s obligation to compensate the investor promptly, adequately and effectively as
plainly stated in Article 4(2) of the Germany-Argentina treaty. It said that the public
purpose of expropriatory measures by the state party in no way alters the legal
obligation to compensate investors affected by those measures. Siemens also stated
that failure to provide prompt, adequate and effective compensation rendered the
expropriation unlawful whether or not it was for a public purpose. On the other hand,
Argentina questioned how the investor had drawn the line to delimit the state‟s
legitimate actions from actions entitling an investor to compensation. Argentina
8 PSEG Global et al. v. Republic of Turkey, ICSID Case No. ARB/02/5, Award, 19 January 2007.
9 Eastern Sugar B.V. v. Czech Republic, SCC Case No. 088/2004 (Czech Republic-Netherlands BIT),
Final 10
Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/08 (Argentina-Germany BIT),
Award, 6 February 2007,
5
argued that, if the effect of depriving a person of its property is the criterion for this
purpose, then any regulation would be expropriatory because regulations have a
damaging effect on regulated parties.
The tribunal interpreted the treaty to require that the expropriation be for a public
purpose and compensated. However, the tribunal found that in this case, the
expropriation was unlawful because the measures were not motivated by a public
purpose. It held that, while the public purpose of the 2000 Emergency Law was
evident, its application through the relevant decree to the specific case of Siemens‟
investment and the public purpose of the same were questionable. For these reasons, it
held the expropriation did not meet the requirements of Article 4(2) and therefore was
unlawful. The tribunal awarded Siemens US$217 million in damages for multiple
treaty breaches.
Of the seven awards rendered in 2007 that examined claims based on expropriation,
only two decided in favour of the investor (Siemens v. Argentine Republic and Vivendi
v. Argentine Republic), while five rejected such claims (Enron v. Argentine Republic,
Parkerings v Lithuania, Sempra v. Argentine Republic, Eastern Sugar v. Czech
Republic, PSEG v Turkey). Three of the five tribunals that rejected the expropriation
claims nonetheless found that the host countries had violated other treaty provisions,
in particular the fair and equitable treatment standard (Enron v. Argentine Republic,
Sempra v. Argentine Republic, PSEG v. Turkey).
In 2008, the tribunal in Biwater v Tanzania, concluded that, on a cumulative basis, the
measures in question, i.e. the public announcement of the termination of the contract;
6
the subsequent political rally; the withdrawal of the tax certificate; and finally, the
seizing of the assets of City Water, the immediate installation of DAWASCO, and the
deportation of City Water‟s management, amounted to an expropriation of the
investor‟s investment on the basis of Article 5 of the UK-Tanzania BIT. However,
although the tribunal found that Tanzania's actions in respect of its lease contract with
Biwater amounted to an expropriation and a violation of several standards in the UK-
Tanzania BIT, it concluded that Tanzania did not owe Biwater any compensation
since there was no causal link between the breaches and the losses sustained by
Biwater, as Biwater‟s mismanagement of its investment prior to the breaches had
already been the cause of its own losses.
As can be seen from the above, awards in the last year did not introduce any clarity to
the issue of whether regulatory measures in the public interest will be considered an
expropriation, and therefore require compensation, or whether such measures will be
seen as an exercise of a state‟s police powers and therefore not an expropriation. This
lack of clarity has prompted states, particularly the US and Canada, to draft their
expropriation provision with specific language dealing with regulatory measures.
(These are discussed in the 2007 paper by Howard Mann previously referred to.) The
next section discusses similar responses from other parts of the world that have
occurred more recently.
4. Recent IIA texts on Expropriation
This section examines the developments made with respect to the expropriation
provision in the draft Norwegian Model Agreement for the Promotion and Protection
7
of Investments (“the Model”) circulated for comments earlier this year by the
Norwegian government, and the Investment Agreement for the COMESA Common
Investment Area (CCIA) signed last year.
4.1 The Norwegian Model
Norway‟s model comes at a critical juncture as the Norwegian government considers
whether to resume the signing of BITs, which has remained suspended since the mid-
nineties. The suspension in signing BITs by Norway was prompted by issues
associated with the relationship of the investor-state provisions in BITs and the
Norwegian constitution together with the limitation such agreements may impose on a
government‟s ability to regulate in the public interest particularly with respect to the
compensation for expropriation provisions.
Article 6 of the Norwegian Model provides as follows:
“1. A Party shall not expropriate or nationalise an investment of an investor of the
other Party except in the public interest and subject to the conditions provided for by
law and by the general principles of international law.
2. The preceding provision shall not, however, in any way impair the right of a
Party to enforce such laws as it deems necessary to control the use of property in
accordance with the general interest or to secure the payment of taxes or other
contributions or penalties.”
8
The English translation of the Comments on the Norwegian BITs provides the
following:
“The expropriation provision must provide effective and intentional investor
protection, while safeguarding the regulatory freedom of the state. The aim of an
expropriation provision is to protect established investments from open or
camouflaged expropriation. The provision must at the same time safeguard the state’s
right to implement general regulations and administrative decisions without incurring
liability to pay compensation. The challenge involves finding the correct point of
intersection between regulation/intervention by the authorities that is deemed to be
expropriation (and thus gives rise to claims for compensation) and the measures that
fall outside this category.”
The Norwegian Model‟s approach is to limit what is deemed expropriation pursuant
to the general provisions of international law. Further, the provision contains an item
referring to and safeguarding the general regulatory freedom of the state on its own
territory. The Norwegian Model also departs from the usual provision that
compensation shall be paid in connection with expropriation. The formulation often
used is the so-called “Hull formula” (“prompt, adequate and effective”
compensation). The explanation provided by the Norwegian government for this
departure from standard practice is as follows:
“There are several reasons why these formulations have not been used in the model
agreement. Firstly, there are many different formulations in BITs. Many of the
formulations go further than what we perceive to be current international law, and
9
probably provide greater protection to investors than has been assessed as
appropriate in Norway”.
The approach taken by Norway is an example of how countries are challenging the
existing exposition of the expropriation provision to design a standard that meets the
level of protection they wish to provide foreign investors while expressly retaining
their ability to regulate in the public interest without the fear of compensation claims.
The expropriation provision and the preamble of the Norwegian Model are included
in Annex B.
4.2 COMESA CCIA
The COMESA CCIA is a regional agreement which adapts the standard expositions
found on expropriation in IIAs to suit the level of protection signatory member states
wish to provide to foreign investors.
The CCIA begins with a fairly standard provision on expropriation. Article 20 of the
CCIA provides that host states shall not nationalise or expropriate investments in their
territory or adopt any other measures tantamount to expropriation of investments
except: (a) in the public interest; (a) on a non-discriminatory basis; (b) in accordance
with due process of law; and (c) on payment of prompt adequate compensation. It also
provides that “Appropriate compensation shall normally be equivalent to the fair
market value of the expropriated investment immediately before the expropriation
took place (“date of expropriation”), and shall not reflect any change in value
occurring because the intended expropriation had become known earlier.” The CCIA
10
then states that the compensation may be adjusted to reflect the aggravating conduct
by a COMESA investor or such conduct that does not seek to mitigate damages.
The provision on expropriation is further qualified to take into account the decisions
of some tribunals that have held government regulatory conduct taken in the public
interest to be in breach of the expropriation provision. Several points can be made
here.
Article 20 (6) provides that the article shall not apply to the issuance of compulsory
licences granted in relation to intellectual property rights, or to the revocation,
limitation or creation of intellectual property rights, to the extent that such issuance,
revocation, limitation or creation is consistent with applicable international
agreements on intellectual property.
Article 20 (7) provides that a measure of general application shall not be considered
an expropriation of a debt security or loan covered by this Agreement solely on the
ground that the measure imposes costs on the debtor that cause it to default on the
debt.
Article 20 (8) then contains a critical qualification using strong language often not
seen in BIT, as follows:
“Consistent with the right of states to regulate and the customary international law
principles on police powers, bona fide regulatory measures taken by a Member State
that are designed and applied to protect or enhance legitimate public welfare
11
objectives, such as public health, safety and the environment, shall not constitute an
indirect expropriation under this Article.”
These specific qualifications are bolstered by general exceptions in Article 22 of the
CCIA which creates a detailed list of exceptions for measures taken by a state to
protect public interest and security. Articles 24 and 25 of the CCIA allow a member
state to take safeguard measures in emergency situations and serious balance of
payments or external financial difficulties. The CCIA also includes a preamble
reflecting broader development interests. The relevant provisions in the CCIA are
listed in Annex C.
5. Concluding Remarks
The recent IIA awards do not introduce any additional clarity for states on whether
regulatory measures taken by them that impact the economics of an investment will
be deemed an expropriation. Most of the awards in 2007 focused on the level of the
impact required on the investment before it could be considered as an expropriation, a
test which was not met in most of the cases. Thus the issue of whether the regulatory
measure was an expropriation that required compensation did not arise in these cases.
In the cases that expropriation was found the government measures in question were
not deemed as general regulations in the public interest but more specific measures
affecting the particular investment.
An interesting development in the treaty texts of both developed and developing
countries, as illustrated first by the US and Canadian model BITs and more recently
12
by the Norwegian Model and the CCIA, has been the drafting of the expropriation
provision in a manner that expressly provides states with the policy space to
undertake public interest regulatory measure without the risking the compensation of
investors, a marked departure from the standard, very broad exposition found in IIAs.
13
ANNEX A: Awards in 2007
Compañiá de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic,
ICSID Case No. ARB/97/3 (France-Argentina BIT) Award, 20 August 2007
Siemens A.G. v. Argentine Republic, ICSID Case No. ARB/02/08 (Argentina-Germany
BIT), Award, 6 February 2007
Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case
No. ARB/01/3 (Argentina- United States BIT), Award, 22 May 2007 (Decision on
Rectification, 25 October 2007)
Parkerings-Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8 (Lithuania-
Norway BIT), Award, 11 September 2007
Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16
(Argentina-United States BIT), Award, 28 September 2007
Eastern Sugar B.V. v. Czech Republic, SCC Case No. 088/2004 (Czech Republic-
Netherlands BIT), Final Award, 12 April 2007
PSEG Global et al. v. Republic of Turkey, ICSID Case No.ARB/02/5, Award, 19
January 2007.
14
ANNEX B: The Norway Model BIT
PREMABLE OF THE NORWEGIAN MODEL
The Kingdom of Norway and the................................., hereinafter referred to as the
"Parties";
Desiring to develop the economic cooperation between the Parties;
Desiring to encourage, create and maintain stable, equitable, favourable and
transparent conditions for investors of one Party and their investments in the territory
of the other Party on the basis of equality and mutual benefit;
Desiring to achieve these objectives in a manner consistent with the protection of
health, safety, and the environment, and the promotion of internationally recognized
labour rights;
Desiring to contribute to a stable framework for investment in order to maximize
effective and sustainable utilization of economic resources and improve living
standards;
Conscious that the promotion and reciprocal protection of investments in accordance
with this Agreement will stimulate the business initiative;
15
Emphasising the importance of corporate social responsibility;
Recognising that the development of economic and business ties can promote respect
for internationally recognised labour rights;
Reaffirming their commitment to democracy, the rule of law, human rights and
fundamental freedoms in accordance with their obligations under international law,
including the principles set out in the United Nations Charter and the Universal
Declaration of Human Rights;
Recognising that the promotion of sustainable investments is critical for the further
development of national and global economies as well as for the pursuit of national
and global objectives for sustainable development, and understanding that the
promotion of such investments requires cooperative efforts of investors, host
governments and home governments;
Recognising that the provisions of this agreement and provisions of international
agreements relating to the environment shall be interpreted in a mutually supportive
manner;
Determined to prevent and combat corruption, including bribery, in international trade
and investment;
Recognising the basic principles of transparency, accountability and legitimacy for all
participants in foreign investment processes;
16
Have agreed as follows:
ARTICLE [6]
EXPROPRIATION
1. A Party shall not expropriate or nationalise an investment of an investor of the
other Party except in the public interest and subject to the conditions provided
for by law and by the general principles of international law.
2. The preceding provision shall not, however, in any way impair the right of a
Party to enforce such laws as it deems necessary to control the use of property
in accordance with the general interest or to secure the payment of taxes or
other contributions or penalties.
17
ANNEX C: COMESA CCIA
ARTICLE 20
Expropriation
1. Member States shall not nationalize or expropriate investments in their
territory or adopt any other measures tantamount to expropriation of
investments except:
(a) in the public interest;
(a) on a non-discriminatory basis;
(b) in accordance with due process of law; and
(c) on payment of prompt adequate compensation.
2. Appropriate compensation shall normally be equivalent to the fair
market value of the expropriated investment immediately before the
expropriation took place (“date of expropriation”), and shall not reflect any
change in value occurring because the intended expropriation had become
known earlier. Compensation may be adjusted to reflect the aggravating
conduct by a COMESA investor or such conduct that does not seek to
mitigate damages.
3. If payment is made in a currency of the host or home state,
compensation shall include interest at a commercially reasonable rate for that
currency from the date of expropriation until the date of actual payment.
4. If a Member State elects to pay in a currency other than a host or home
state currency, the amount paid on the date of payment, if converted into a
host or home state currency at the market rate of exchange prevailing on that
18
date, shall be no less than if the amount of compensation owed on the date of
expropriation had been converted into that host or home state currency at the
market rate of exchange prevailing on that date, and interest had accrued at a
commercially reasonable rate for that host or home state currency from the
date of expropriation until the date of payment.
5. On payment, compensation shall be freely transferable. Awards that
are significantly burdensome on a host state may be paid yearly over a period
agreed by the Parties, subject to interest at the rate established by agreement
of the disputants or by a tribunal.
6 This Article shall not apply to the issuance of compulsory licences
granted in relation to intellectual property rights, or to the revocation, limitation
or creation of intellectual property rights, to the extent that such issuance,
revocation, limitation or creation is consistent with applicable international
agreements on intellectual property.
7. A measure of general application shall not be considered an
expropriation of a debt security or loan covered by this Agreement solely on
the ground that the measure imposes costs on the debtor that cause it to
default on the debt.
8. Consistent with the right of states to regulate and the customary
international law principles on police powers, bona fide regulatory measures
taken by a Member State that are designed and applied to protect or enhance
legitimate public welfare objectives, such as public health, safety and the
environment shall not constitute an indirect expropriation under this Article.
9. The investor affected by the expropriation shall have a right under the
law of the Member State making the expropriation, to a review by a juridical or
19
other independent authority of that Member State, of his/its case and the
valuation of his/its investment in accordance with the principles set out in
paragraphs (1) to (8) of this Article. The Member State making the
expropriation shall ensure that such a review is carried out promptly.
ARTICLE 22
General Exceptions
1. Subject to the requirement that such measures are not applied in a
manner which would constitute a means of arbitrary or unjustifiable
discrimination between investors where like conditions prevail, or a disguised
restriction on investment flows, nothing in this Agreement shall be construed
to prevent the adoption or enforcement by any Member State of measures:
(a) designed and applied to protect national security and public morals;
(b) designed and applied to protect human, animal or plant life or health;
(c) designed and applied to protect the environment; or
(d) any other measures as may from time to time be determined by a
Member State, subject to approval by the CCIA Committee.
2. Nothing in this Agreement shall be construed to prevent a Member
State from adopting, maintaining or enforcing any measure that it considers
appropriate to ensure that investment activity in its territory is undertaken in a
manner sensitive to the principles outlined in sub-paragraphs 1(a) to (c)
above.
3. Nothing in this Agreement shall be construed to:
(a) preclude a Member State from applying measures that it considers
20
necessary for the fulfillment of its obligations under the United Nations
Charter with respect to the maintenance or restoration of international
peace or security, or the protection of its own essential security
interests; or
(b) require a Member State to furnish or allow access to any information
the disclosure of which it determines to be contrary to its essential
security interests.
ARTICLE 24
Emergency Safeguard Measures
1. If, as a result of opening up of economic activities in accordance with
this Agreement, a Member State suffers or is threatened with any serious
injury, the Member State may take emergency safeguard measures to the
extent and for such period as may be necessary to prevent or to remedy such
injury. The measures taken shall be provisional and without discrimination.
2. Where emergency safeguard measures are taken pursuant to this
Article, notice of such measures shall be given to the CCIA Committee within
14 days from the date they are taken. The notice shall include justification of
such action supported by evidence gathered from an investigation.
3. The CCIA Committee shall determine what constitutes serious injury
and threat of serious injury and the procedures of instituting emergency
safeguard measures pursuant to this Article.
21
ARTICLE 25
Measures to Safeguard Balance of Payments
1. In the event of serious balance of payment and external financial
difficulties or threat thereof, a Member State may adopt or maintain
restrictions on investments on which it has undertaken commitments provided
for in Articles 15, 17, 19 and 20, including on payments or transfers for
transactions related to such commitments.
2. Where measures to safeguard balance of payments are taken pursuant
to this Article, notice of such measures shall be given to the CCIA Committee
within 14 days from the date such measures are taken.
3. The measures referred to in paragraph 1:
(a) shall not discriminate among Member States;
(b) shall be consistent with Article VIII of the Agreement of the International
Monetary Fund;
(c) shall avoid unnecessary damage to the commercial, economic and
financial interests of any other Member State;
(d) shall not exceed those necessary to deal with the circumstances
described in paragraph 1; and
(e) shall be temporary and be phased out progressively as the situation
specified in paragraph 1 improves.
4. A Member State adopting the balance of payment measures shall
commence consultations with Member States through the CCIA Committee
within 90 days from the date of notification in order to review the balance of
payment measures adopted by it.
22
5. The CCIA Committee shall determine the rules applicable to the
procedures under this Article.
23
References
Investment Agreements and the Regulatory State: Can Exceptions Clauses
Create a Safe Haven for Governments?” written by Howard Mann Issues in
International Investment Law Background Papers for the Developing Country
Investment Negotiators‟ Forum Singapore, October 1-2, 2007
Latest developments in investor-State dispute Settlement
IIA MONITOR No. 1 (2008)
International investment agreements
UNCTAD/WEB/ITE/IIA/2008/3
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT, Geneva
Investment Treaty News
15 October 2007
Published by IISD
www.investmenttreatynews.com
Investment Treaty News
01 February 2007
Published by IISD
www.investmenttreatynews.com