National Treatment: In Like Circumstances

Transcription

1 UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT 2006/IEG/SEM/011 National Treatment: In Like Circumstances Submitted by: US APEC-UNCTAD Regional Seminar on Investor-State Dispute Settlement Mexico City, Mexico 9-10 October 2006

2 National Treatment: in like circumstances Mark Clodfelter Office of International Claims and Investment Disputes U.S. Department of State Colombia-Mexico-Venezuela Free Trade Agreement (1994) Each Party shall shall accord to investors of another Party, and to their investments treatment not less favorable than that which it accords, in like circumstances to its own investors and investments. Art (1) 1

3 Mexico-Japan Economic Partnership Agreement (2004) Each Party shall accord to investors of the other Party and to their investments treatment no less favorable than the treatment it accords, in like circumstances, to its own investors and to their investments with respect to the establishment, acquisition, expansion, management, conduct, operation maintenance, use, enjoyment and sale or other disposition of investments... Art. 58(1) NAFTA (1994) Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. Art. 1102(1) 2

4 1. Who is the beneficiary of the protection, i.e., the subject of the comparison? 2. Who is the comparator in like circumstances? 3. Was the treatment accorded to the first less favorable than that accorded to the second? S.D. Myers, Inc. v. Canada Interpretation of like circumstances must take into account the legal context of both (1) NAFTA s concern for environment and avoiding trade distortions, and (2) circumstances that would justify regulations in the public interest invites an examination of whether a non-national investor complaining of less favorable treatment is in the same business sector or economic sector as the local investor. Award 250 3

5 Pope & Talbot Inc. v. Canada However, that first step is not the last one. Differences in treatment will presumptively violate Article 1102(2), unless they have a reasonable nexus to rational government policies that (1) do not distinguish, on their face or de facto, between foreign-owned and domestic companies, and (2) do not otherwise unduly undermine the investment liberalizing objectives of NAFTA. Award 78 ADF Group Inc. v. United States The question may be raised whether the equality of treatment accorded by the Respondent to the Investor and to U.S. steel manufacturers and steel fabricators was more apparent than real, and whether less favorable treatment was de facto (though not de jure) being meted out to ADF International. The Investor also submitted that Article 1102 assumes that an investor of another NAFTA Party entitled to invoke Article 1102 will have its facilities located outside the territory of the host Party and that for a U.S. steel fabricator, the ability to fabricate structural steel in Canada was irrelevant. Evidence of discrimination, however, is required. Award 157 4

6 Methanex Corp. v. United States Given the object of Article 1102 and the flexibility which the provision provides in its adoption of like circumstances, it would be as perverse to ignore identical comparators if they were available and to use comparators that were less like, as it would be perverse to refuse to find and to apply less like comparators when no identical comparators existed. Award 17 Pt. IV, Chpt. B U.S.-Ecuador BIT (1993) Each Party shall permit and treat investment, and activities associated therewith, on a basis no less favorable than that accorded in like situations to investment or associated activities of its own nationals or companies.... Art. II(1) 5

7 Occidental Exploration & Prod. Co. v. Ecuador [I]n like situations" cannot be interpreted in the narrow sense advanced by Ecuador as the purpose of national treatment is to protect investors as compared to local producers, and this cannot be done by addressing exclusively the sector in which that particular activity is undertaken. Award 173 Marvin Feldman v. Mexico It is clear that the concept of national treatment as embodied in NAFTA and similar agreements is designed to prevent discrimination on the basis of nationality, or by reason of nationality. Award 181 6