CONTENTS: - Introduction. - Egyptian BITs Experience. - BITs reform program. - Economic- based study. - Egyptian Model BIT. - Promoting Egyptian

Transcription

1 CONTENTS: - Introduction. - Egyptian BITs Experience. - BITs reform program. - Economic- based study. - Egyptian Model BIT. - Promoting Egyptian BITs.

2 Introduction The current era of globalization has made it inevitable for any country, developed or developing, to enhance its economic ties with its partners on bilateral, multilateral and regional bases. An important part of this trend is to create the supportive frameworks for international investment on the national and international levels including national legislations and International Investment Agreements (IIAs) that are concluded on the bilateral, multilateral and regional levels. The main objectives of IIAs is to assist in strengthening the enabling framework for FDI,being an integral part of a country s investment promotion strategies, beside protecting the rights of foreign investors through granting them more favorable treatment in the investment host country.

3 The Egyptian BITs Experience Egypt has a long-standing and active tradition of concluding IIAs whether at the bilateral, regional or multilateral levels. In this context, Egypt has occupied a rank between the fifth and sixth among the top ten signatories of BITs worldwide with a total number of around 111 BITs. However, analyzing the nature of the top 10 signatories of BITs illustrated that Egypt is the only mainly investment recipient country among a list comprising 9 huge FDI exporters.

4 The Egyptian BITs Experience Egypt is the 6 th among the top 10 signatories of BITs in 2011 Source: UNCTAD, 2011

5 The Egyptian BITs Experience This was accompanied by another three important facts : 1- The high percentage of BITs which didn't enter into force reaching around 44% of the mentioned total (48 BITs). 2- The review of many BITs showed that they lacked a clear pattern identifying the economic priorities of Egypt behind its signature, which is mainly attributed to the dominance of the political objectives over the economic ones during the processes of negotiation and signature. 3- The state of imbalance that characterized many BITs in favor of the foreign investors at the expense of the host country, deviating those treaties from one of its essential objectives usually stipulated in its preambles concerning the contribution to the economic development of its c o n t a c t i n g p a r t i e s. 5

6 BITs reform program Egypt started since 2005 a reform program for its BITs network based on three pillars related to the pre negotiation,negotiation and implementation phases : 1- An economic based study of any new BIT. 2- A new Model BIT. 3- Promoting the Egyptian BITs. The main objectives of this reform program were: -Granting priority to real economic interests in concluding BITs. -Attaining consistency between Egyptian BITs. -Reducing the number of treaty based disputes. -Achieving balance between the investor s and state s interests. -Asserting the role of BITs in attaining sustainable development of Egypt and its partners.

7 BITs reform program First : An economic- based study of any new BIT: This study is done using specific economic criteria which act as a tool for evaluating the economic feasibility of concluding a BIT with any country. This criteria was formulated in the shape of a Check List of economic indicators, covering a time series, that must be satisfied to take a reasonable economic decision regarding the proposed agreement.

8 BITs reform program Second : The Egyptian BIT Model : A new Egyptian model BIT was adopted in 2007 after two years of work and consultations with all the stakeholders including governmental entities, investors, law firms and arbitration centers, depending on the technical assistance of UNCTAD. This model was made through comparative study of the best practices in different BITs models all over the world, expressing the Egyptian needs and interests, to act as a road map for negotiated investment treaties. 8

9 The Egyptian Model BIT- continued T h e m a i n o b j e c t i v e s o f t h e n e w m o d e l a r e : - Achieving consistency and conformity between Egyptian BITs. -Restoring the sustainable balance in those BITs between the objectives of promotion,protection and liberalization of foreign investments on one hand and its regulation on the other hand, through supporting the sovereign right of the host state to regulate and maintain its policy space to highlight the role of FDI in achieving sustainable development and enforce the respect of its rules,regulations and national objectives. 9

10 The Egyptian Model BIT- continued The main features of the Egyptian model BIT are : 1- Providing precise definitions to the main terms in BITs especially those of "investment" and "investor" that represent real sources of investment disputes. This includes going apart from the traditional broad asset-based definition of "investment",through specific limitations and linking covered investment with satisfying certain economic characteristics and respecting the laws and regulations of the host state,beside excluding non investment activities. In addition,the new definition of "investor" concentrates on proving a real relationship between the investor and his home country, either a natural person or a legal entity, using multi criteria,in order to exclude the non welcomed investors (ex. double nationals shell companies). 10

11 The Egyptian Model BIT- continued 2- Promoting and facilitating investments of foreign investors and providing them favorable treatment, protection and security according to the international standards of treatment. And ensuring that the investor s rights and assets are guaranteed and protected in a manner that is legitimate, transparent and accountable. 3- Recognizing more widely the values of transparency and exchange of information and experiences between the BIT contracting states on investment laws,regulations,policies and opportunities. 11

12 The Egyptian Model BIT- continued 4- Enhancing the role of BITs in achieving sustainable development of the host country, through ensuring that the objectives of FDI attraction and promotion are implemented without relaxing the environmental,health and safety standards and labor rights of general application. 5- Guarantee the free transfer of funds without delay in a freely convertible currency, while acknowledging the host state s right to take safeguard measures to deal with serious short-term balance of payments difficulties or monetary policy difficulties. However,these safeguard measures - derived from the GATS commitments - shall be pursued through respecting the principles of non-discrimination, avoidance of unnecessary damage, proportionality,phasing out and conformity with the IMF Agreement. 12

13 The Egyptian Model BIT- continued 6- Developing a convenient and flexible mechanism for Investor- State Dispute Settlement that pays substantial attention to the settlement by amicable ways and administrative review within a cooling off period as the first resort before granting the investor the right to choose between multiple tools for settlement of his dispute including national litigation and international arbitration. 13

14 The Egyptian Model BIT- continued In addition, the model provides some tools to reduce treaty -based disputes through the following : -The exclusion of the right of the investor to raise claims depending on the BIT after a certain period of time. -The separation between treaty -based disputes on one side and contractbased disputes on the other side, through rendering each kind of disputes managed by the dispute settlement mechanism established in its concerned legal framework. - Eliminating the ability of manipulating the MFN treatment (treaty shopping) through the stipulation on the exclusion of the application of MFN on ISDS clauses. - Denying the benefits of the BIT to legal entities that are incorporated under the laws of one of the contracting parties, but are owned or controlled by investors from a third country. 14

15 Enhancing the model in the post Jan 25 th Revolution The adoption of the Egyptian model BIT represents a dynamic process that should always respond to new developments on the national and i n t e r n a t i o n a l l e v e l s. In this context,the Jan 25 th Revolution opened a new door towards achieving the legitimate aspirations of the Egyptian people to achieve democracy,social justice and development. This could be reflected in BITs through maintaining the right balance between protecting investors and states' rights and obligations, in the manner that attract only the responsible investor who respects his contractual commitments, CSR obligations and the laws and regulations of t h e h o s t s t a t e. These include the need to stipulate on a clear clauses on combating corrupt practices related to investment,preserving the human and national security, and sustaining effective environmental and health standards, beside protecting the business related human rights, especially internationally r e c o g n i z e d l a b o r r i g h t s. 15

16 BITs reform program Third : Promotion of Egyptian BITs: The third pillar of the Egyptian BITs reform program targeted the efficient promotion of these treaties and its benefits and legal impacts within both the business community and public officials. As for the business sector, many investors are still not aware of the level of protection and guarantees accorded to them by these agreements. On the other side, senior public officials represent in many cases a critical reason behind investment disputes as a result of their irresponsible decisions that may violate their countries commitments in BITs or state contracts. This dual promotional mission is mainly implemented through organizing seminars and workshops. 16

17 Thank You 17