Investor Obligations. Nathalie Bernasconi- Osterwalder

Transcription

1 Investor Obligations Nathalie Bernasconi- Osterwalder

2 The new era of investment trea0es: Addressing investor behaviour Unthinkable a few years back Now: COMESA (elements) UNCTAD IPFSD Commonwealth Guide SADC template EU?? Why? To influence investor behaviour and improve the quality of investment To promote sustainable development, the respect of human rights by investors, and environmental protection, combat corruption To create a better balance in investment treaties and guarantee a more complete approach To complement or bolster domestic law in host and home states To address gaps and weaknesses in domestic and international law to hold transnational corporations accountable To improve governance Etc.

3 Investor obliga0ons Coverage What obligations are covered in the investment treaty? What language is used: mandatory must, shall v best endeavour strive to? Where are the obligations incorporated: In the preamble or the body text? How does the obligation relate to host state law? Enforcement of investor obligations International level under the treaty s investor-state process and/or State-State process Interpretation (affects finding of a violation, amount of damages) Loss of investor protection Counterclaims Investor liability in domestic courts (home/host) Separate grievance mechanism Links to home and host state obligations: Investor obligations may be linked to state party obligations (corruption, human rights, labour, environmental protection) Investor obligations are linked to host state rights (Right to regulate, etc.)

4 Investor obliga0ons: Coverage in the SADC Template Part 3: Rights and Obligations of Investors and State Parties Article 10: Common Obligation against Corruption Article 11: Compliance with Domestic Law Article 12: Provision of Information Article 13: Environmental and Social Impact Assessment Article 14: Environmental Management and Improvement Article 15: Minimum Standards for Human Rights, Environment and Labour Article 16: Corporate Governance Standards Article 17: Investor Liability Article 18: Transparency of Contracts and Payments Article 19: Relation to Dispute Settlement Article 20: Right of States to Regulate Article 21: Right to Pursue Development Goals Article 22: Obligations of States on Environment and Labour Standards

5 SADC template Article 10: Common Obligation against Corruption [This ar(cle must be read in conjunc(on with ar(cle 2 on the defini(on of investment.] Investors and their Investments shall not, prior to the establishment of an Investment or afterwards, offer, promise or give any undue pecuniary or other advantage, whether directly or through intermediaries, to a public of<icial of the Host State, or a member of an of<icial s family or business associate or other person in close proximity to an of<icial, for that of<icial or for a third party, in order that the of<icial or third party act or refrain from acting in relation to the performance of of<icial duties, in order to achieve any favour in relation to a proposed investment or any licences, permits, contracts or other rights in relation to an Investment Investors and their Investments shall not be complicit in any act described in Paragraph 10.1, including incitement, aiding and abetting, and conspiracy to commit or authorization of such acts A breach of this article by an Investor or an Investment is deemed to constitute a breach of the domestic law of the Host State Party concerning the establishment and operation of an investment The State Parties to this Agreement, consistent with their applicable law, shall prosecute and where convicted penalize persons that have breached the applicable law implementing this obligation. [*Special Note: this ar(cle must be read in conjunc(on with ar(cle 2 on the defini(on of investment.]

6 Ar#cle 12: Provision of Informa#on [This ar(cle must be read in conjunc(on with ar(cle 2 on the defini(on of investment.] An Investor shall provide such informa0on to an actual or poten0al Host State as that State Party may require concerning the Investment in ques0on and the corporate history and prac0ces of the Investor, for purposes of decision making in rela0on to that Investment or solely for sta0s0cal purposes The actual or poten0al Host State shall have the right to 0mely and accurate informa0on in this regard. An Investor shall not commit fraud or provide false or misleading informa0on provided in accordance with this Ar0cle A material breach of paragraph 12.2 by an Investor or an Investment is deemed to cons0tute a breach of the domes0c law of the Host State concerning the establishment, acquisi0on, management, opera0on and disposi0on of Investments The actual or poten0al Host State Party may make such informa0on available to the public in the loca0on where the Investment is to be located, subject to other applicable law and the redac0on of confiden0al business informa0on. The State Party shall protect any confiden0al business informa0on from any disclosure that would prejudice the compe00ve posi0on of the Investor or the Investment Nothing in this Ar0cle shall be construed to prevent a State Party from otherwise obtaining or disclosing informa0on in connec0on with the equitable and good faith applica0on of its domes0c law or in connec0on with disputes between the Investor and the State regarding the Investment.

7 Ar#cle 13:Environmental and Social Impact Assessment (Read in conjunc-on with Ar-cle 19 on the rela-on to DS) Investors or their Investments shall comply with environmental and social assessment screening criteria and assessment processes applicable to their proposed investments prior to their establishment, as required by the laws of the Host State for such an investment [[or the laws of the Home State for such an investment][or the Interna0onal Finance Corpora0on s performance standards on Environmental and Social Impact Assessment], whichever is more rigorous in rela0on to the Investment in ques0on.] The impact assessments required under paragraph 13.1 shall include assessments of the impacts on the human rights of the persons in the areas poten0ally impacted by the investment, including the progressive realiza0on of human rights in those areas Investors or their Investments shall make the environmental and social impact assessments: public [including via the Internet] and accessible to the local communi0es, or other areas with poten0ally affected interests, in an effec0ve and sufficiently 0mely manner so as to allow comments to be made to the Investor, Investment and/or government prior to the comple0on of the Host State processes for establishing an Investment Investors, their Investments and the Host State authori0es shall apply the precau0onary principle to their environmental impact assessment and to decisions taken in rela0on to a proposed investment, including any necessary mi0ga0ng or alterna0ve approaches to the Investment, or precluding the Investment if necessary. The applica0on of the precau0onary principle by Investors and Investments shall be described in the environmental impact assessment.

8 Ar#cle 15: Minimum Standards for Human Rights, Environment and Labour (Read in conjunc-on with Ar-cle 19 on the rela-on to DS) Investors and their investments have a duty to respect human rights in the workplace and in the community and State in which they are located. Investors and their investments shall not undertake or cause to be undertaken acts that breach such human rights. Investors and their investments shall not assist in, or be complicit in, the viola0on of the human rights by others in the Host State, including by public authori0es or during civil strife Investors and their investments shall act in accordance with core labour standards as required by the ILO Declara0on on Fundamental Principles and Rights of Work, Investors and their investments shall not [establish,] manage or operate Investments in a manner inconsistent with interna0onal environmental, labour, and human rights obliga0ons binding on the Host State or the Home State, whichever obliga0ons are higher.

9 Ar#cle 14: Environmental Management and Improvement (Read in conjunc-on with Ar-cle 19 on the rela-on to DS) Investments shall, in keeping with good prac0ce requirements rela0ng to the size and nature of the Investment, maintain an environmental management system consistent with recognized interna0onal environmental management standards and good business prac0ce standards Emergency response and decommissioning plans shall be included, and regularly reviewed and updated in the environmental management system process, and made accessible to the Host State and the public A closure fund to ensure that resources are available to implement the decommissioning plan shall be established and maintained by the Investor or its Investment in accordance with good industry prac0ce for such funds Environmental management plans shall include provision for the con0nued improvement of environmental management technologies and prac0ces over the life of the Investment. Such improvements shall be consistent with applicable laws, but shall strive to exceed legally applicable standards and always maintain high levels of environmental performance consistent with best industry prac0ce.

10 Ar#cle 16: Corporate Governance Standards (Read in conjunc-on with Ar-cle 19 on the rela-on to DS) Investments shall meet or exceed na0onal and interna0onally accepted standards of corporate governance for the sector involved, in par0cular for transparency and in the applica0on of interna0onally accepted accoun0ng standards Investors and their investments shall ensure that all transac0ons with related or affiliated companies shall be arms length transac0ons at fair market price. Investors and their investments shall not undertake any transfer pricing prac0ces between themselves or any other related or affiliated companies.

11 Ar#cle 18: Transparency of Contracts and Payments (Read in conjunc-on with Ar-cle 19 on the rela-on to DS) Investors or their investments shall make public in a 0mely manner all contracts related to the establishment or right to operate an Investment made by the Investor or the Investment with a government in the Host State Investors or their investments shall make public in a 0mely manner all payments made to a government related to the establishment or right to operate of an Investment, including all taxes, royal0es and similar payments Where feasible, such contracts and payments shall be made available on an Internet website freely accessible by the public The State Party that is the recipient of payments or party to an investment- related contract shall [have the right to] make the payments and contracts available to the public, including through an Internet site freely accessible to the public Confiden0al business informa0on shall be redacted from contracts made public in accordance with this Ar0cle.

12 Enforcement of investor obliga#ons: Ar#cle 17: Investor Liability Investor Liability Investors and Investments shall be subject to civil ac0ons for liability in the judicial process of their Home State for the acts, decisions or omissions made in the Home State in rela0on to the Investment where such acts, decisions or omissions lead to significant damage, personal injuries or loss of life in the Host State Home States shall ensure that their legal systems and rules allow for, or do not prevent or unduly restrict, the bringing of court ac0ons on their merits before domes0c courts rela0ng to the civil liability of Investors and Investments for damages resul0ng from alleged acts, decisions or omissions made by Investors in rela0on to their Investments in the territory of the Host State.

13 Enforcement of Investor Obligations: Links to dispute settlement Ar#cle 19: Rela#on to Dispute SeOlement Subject to any other specific direc0ons under this Agreement as to the consequences of a breach of an obliga0on, where an Investor or its Investment is alleged by a State Party in a dispute sealement proceeding under this Agreement to have failed to comply with its obliga0ons under this Agreement, the tribunal hearing such a dispute shall consider whether this breach, if proven, is materially relevant to the issues before it, and if so, what mi0ga0ng or off- sebng effects this may have on the merits of a claim or on any damages awarded in the event of such award A Host State may ini0ate a counterclaim against the Investor before any tribunal established pursuant to this Agreement for damages or other relief resul0ng from an alleged breach of the Agreement In accordance with its applicable domes0c law, the Host State, including poli0cal subdivisions and officials thereof, private persons, or private organiza0ons, may ini0ate a civil ac0on in domes0c courts against the Investor or Investment for damages arising from an alleged breach of the obliga0ons set out in this Agreement In accordance with the domes0c law of the Home State, the Host State, including poli0cal subdivisions and officials thereof, private persons, or private organiza0ons, may ini0ate a civil ac0on in domes0c courts of the Home State against the Investor, where such an ac0on relates to the specific conduct of the Investor, and claims damages arising from an alleged breach of the obliga0ons set out in this Agreement.

14 Thank you! Nathalie Bernasconi-Osterwalder Investment and Sustainable Development Program (IISD)