INVEST-SD: Investment Law and Policy Weekly News Bulletin, Feb.7, 2005

Transcription

1 INVEST-SD: Investment Law and Policy Weekly News Bulletin, Feb.7, 2005 Published by the International Institute for Sustainable Development ( Contents at a Glance: Negotiation Watch 1. Civil society groups look for input into Canada-China investment treaty negotiations 2. IISD seeking comments on draft model investment agreement Arbitration Watch 3. Argentine groups make bid to intervene in Aguas Argentinas arbitration 4. ICSID registers 2 new investment treaty arbitrations Briefly noted 5. Cemex v. Indonesia arbitration not settled, contrary to earlier reports 6. Washington event to discuss Most Favored Nation treatment 7. Institute solicits proposals for human rights impact assessments of investment projects 8. ICSID releases results of client survey Negotiation Watch: Civil society groups look for input into Canada-China investment treaty negotiations, By Luke Eric Peterson

2 The Canadian government is negotiating a Foreign Investment Promotion and Protection Agreement (FIPA) with China, and a number of Canadian civil society groups are looking for further information about the talks. A spokesperson with Canada's Department of International Trade confirmed to INVEST-SD that a recent meeting between Canadian Prime Minister Paul Martin and Chinese Premier Wen Jiabao saw a commitment to see investment treaty negotiations thru to completion, and that the meeting may give additional momentum to the talks. When asked if the Department planned to publish a draft negotiating text, as has happened at particular stages of the negotiations on an investment chapter of the proposed Free Trade Area of the Americas, the spokesperson said: "Given the highly technical nature of our discussions, there are no plans to publicize draft proposals or negotiating texts at this time." The Government's plans for consultation with the Canadian public on the Canada-China negotiations remain unclear. In reply to a query from INVEST-SD, a department spokesperson pointed to a three-day consultation held late last year on Canada's Emerging Market Strategy. The spokesperson also indicated that "further consultations will take place as negotiations progress." The Emerging Markets Strategy consultation held from November 29-Dec , was an invitation-only event organized so that selected academics, business and non-governmental groups could discuss the government's strategy. Two representatives of Canadian non-governmental organizations which were invited to, and attended, the Ottawa event, told INVEST-SD that they do not recall the subject of Canada's FIPA negotiations with China being raised by government officials or participants at the day-long civil society consultation. A background paper prepared for the session, and available on the Department's website, does make a brief reference to Canada's FIPA negotiations with China. And in recent weeks, the negotiations have been mentioned in speeches and public comments by Canada's Trade Minister and Prime Minister. They have also been the subject of fragmentary (if garbled) reports in the mainstream media.

3 As a result, there is growing interest on the part of Canadian non-governmental groups for more information about the negotiations. A half-dozen groups contacted by INVEST-SD over the past week said that they lacked details about the negotiations, and were hoping for more focused consultations with government. Diana Bronson, Coordinator of the Globalization and Human Rights Programme of the Montreal-based International Centre for Human Rights and Democratic Development, told INVEST-SD: "If there is to be a bilateral investment treaty between China and Canada, this merits more than a simple meeting, for there are potentially huge implications for human rights. I would think the Government would understand the urgency of doing a full assessment of its potential impacts on human rights before proceeding with a FIPA and that would involve getting a wide range of views from Canadians." While International Trade Canada says that its plans for further consultation are not yet fixed, it is still soliciting written feedback on its overall Emerging Market Strategy initiative, which would seem to include its ongoing FIPA negotiations with China and India. Recently, the Department extended the deadline for submission of comments on its Emerging Market Strategy to February 28, For more information, visit: Sources: INVEST-SD Interviews Information about International Trade Canada's Emerging Markets Strategy consultations held last year are available at: 2. IISD seeking comments on draft model investment agreement The International Institute for Sustainable Development (IISD) is seeking public comments on its draft model investment agreement for sustainable development. The Institute (publisher of the INVEST-SD News Bulletin) has drafted a model text which sets forth proposed rights and responsibilities for foreign investors, host governments, and home governments. The draft text was discussed at a three-day expert workshop of academics, arbitrators, government officials and non-governmental organizations in January of this year, and is open to further public

4 comment from interested groups and individuals until February 14th, Following receipt of public and expert input, the Institute plans to re-examine the present template and to issue a revised draft text. For further information visit IISD's website at: Arbitration Watch: Argentine groups make bid to intervene in Aguas Argentinas arbitration, By Luke Eric Peterson A group of Argentine civil society organizations has filed a petition with the International Centre for Settlement of Investment Disputes (ICSID) seeking the right to intervene as amicus curiae in a pending water services dispute being arbitrated at the Washington-based Centre: the case of Aguas Argentinas, S.A., Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v. Argentine Republic (ICSID Case No. ARB/03/19). The groups include one of Argentina's leading non-governmental organizations, the Center for Legal and Social Studies (a human rights organization founded during Argentina's military dictatorship in the late 1970s), as well as groups representing labour and consumer interests. The Argentine groups are also joined in their bid by the US-based Centre for International Environmental Law (CIEL). The Aguas Argentinas dispute involves claims made by several of its foreign shareholders, including Spanish company Suez (a 40% shareholder), under the terms of bilateral investment treaties concluded by France, Spain, and the UK with Argentina. The dispute is one of 36 known investment treaty claims filed against Argentina alleging losses related to that nation's recent financial crisis. In making their application for amicus curiae status in the dispute, the non-governmental groups seek access to the legal documents related to Aguas Argentina's claim, as well as the right to present legal arguments. In particular, the groups hope to present arguments on the investment's implications for public health and consumer protection. The Aguas Argentinas case has been a particularly controversial one in Argentina, as the investors operate a large public utility concession

5 which supplies water and sewage services to more than 6 million people in the greater Buenos Aires region of the country. The firm and the government are locked in disagreement over the company's desire to see customer rates rise sharply in order to make up for steep losses incurred during the financial crisis and to finance new investments. In late January, the British Broadcasting Corporation reported that Aguas Argentinas was seeking a 60% increase in water-supply tariffs charged to customers in order to fund any new investments. The Government has countered with an offer of a 16% rate increase, and a demand for the company to invest some $136 million US in new funding. According to other recent press reports, the Government has levied several fines on the company for its deteriorating service and has threatened to cancel the firm's concession if substantial new investments are not made. Although the two parties are engaged in a fitful negotiation effort, the bilateral investment treaty arbitration launched in 2003 continue to proceed at ICSID. The Aguas Argentinas arbitration at ICSID is being handled by a tribunal consisting of Jeswald Salacuse, Professor and former Dean of the Fletcher School of Law and Diplomacy at Tufts University; Gabrielle Kaufmann-Kohler, an Attorney and Professor at the University of Geneva; and Pedro Nikken, a former Judge and President of the Inter-American Court of Human Rights. This same group of arbitrators are presiding over two other Argentine water disputes at ICSID*, as well as a fourth case, Anglian Water Group, launched under the UNCITRAL rules of arbitration, but also being administered by the legal staff of the ICSID facility. In each of the four arbitrations, the claimants are represented by the law firm of Freshfields Bruckhaus Deringer; Argentina is represented by government counsel. One of the organizations involved in the amicus curiae petition in the Aguas Argentinas case, the Center for International Environmental Law, was part of a separate group of non-governmental organizations which sought to intervene in another ICSID arbitration related to a well-publicized water privatization dispute in Cochabamba, Bolivia. In the Aguas Del Tunari v. Bolivia case the presiding tribunal indicated in February of 2003 that, without the consent of the two parties to the

6 dispute, it lacked authority to join the petitioners as parties to the proceedings, to disclose documents related to the dispute, or to open the proceedings to the public. However, the tribunal noted that it would not prejudge its ability to seek input from interested groups at a later stage of the proceeding. Jurisdictional arguments were made in the Aguas Del Tunari case at a hearing held one year ago, however the tribunal still has yet to deliver its jurisdictional verdict in that closely-scrutinized case. Further information about the recent amicus curiae intervention in the Aguas Argentinas case is available on the website of the Centro de Estudios Legales y Sociales (CELS) at: * The other two ICSID arbitrations being handled by the Aguas Argentinas tribunal are: Aguas Provinciales de Santa Fe, S.A., Suez, Sociedad General de Aguas de Barcelona, S.A. and Interagua Servicios Integrales de Agua, S.A. v. Argentine Republic (ICSID Case No. ARB/03/17) and Aguas Cordobesas, S.A., Suez, and Sociedad General de Aguas de Barcelona, S.A. v. Argentine Republic (ICSID Case No. ARB/03/18) Sources: Water firm Suez in Argentina Row, January 24, 2005, BBC News, Argentine Government challenges Suez subsidiary", Jan. 31, 2005, Les Echos (France) Argentina's troubled utilities, The Economist, Jan.29, 2005 "Bolivian Water Privatization Dispute will Continue Behind Closed Doors", INVEST-SD News Bulletin, Feb.7 & 14, Center for International Environmental Law, ICSID list of pending arbitrations at:

7 4. ICSID registers 2 new investment treaty arbitrations The Washington-based International Centre for Settlement of Investment Disputes (ICSID) has seen two new investment treaty claims registered in recent weeks. A claim has been brought by Motorola Credit Corporation against the Republic of Turkey, in relation to a cellular telecommunications investment. Motorola has been embroiled in a web of litigation and arbitration related to a $2 billion US loan to Turkish mobile telecommunications firm Telsim. When the firm defaulted on the loans in 2002, citing Turkey's financial crisis as a contributing factor, Motorola accused the firm and its controlling shareholders, the influential Uzan family, of having siphoned off large amounts of money for their personal use. Motorola's troubles in Turkey have been the subject of considerable mainstream media coverage including in the Wall Street Journal, the Financial Times and the New York Times. A Motorola spokesperson was unavailable at press time, so it could not be confirmed if the claim registered at the ICSID facility was related to Motorola's investments in Telsim. However, a source did confirm that the case has been brought pursuant to the Turkey-United States bilateral investment treaty. The second claim registered at ICSID in recent days, has been brought by Daimler Chrysler Services AG against the Argentine Republic. INVEST-SD understands that the case invokes the provisions of the bilateral investment treaty between Germany and Argentina, and alleges certain damages related to losses suffered during the Argentine financial crisis. Sources: INVEST-SD interviews Briefly Noted: Cemex v. Indonesia arbitration not settled, contrary to earlier reports

8 Contrary to earlier media reports, an ICSID arbitration between Mexican cement company Cemex and Indonesia has yet to be settled. While the two sides were reported to have reached an agreement which would have brought their arbitration to a halt, more recent reports indicate that the two sides are still at odds over the terms of a proposed settlement agreement. A Singaporean subsidiary of the Mexican firm turned to ICSID arbitration in late 2003, invoking the provisions of the 1987 ASEAN Agreement for the Promotion and Protection of Investments, after the investor was unable to exercise an option to purchase a majority stake in the Indonesian cement firm Semen Gresik. The investor acquired a 25% stake in the Indonesian firm in 1998, but encountered political and labour opposition to its bid to take majority control of the firm. INVEST-SD will continue to monitor new developments in the dispute. Sources: "Indonesia faces deadlock in negotiations with Cemex", AFX-Asia news, January 31, Washington event to discuss Most Favored Nation treatment A panel session organized by the American Society of International Law and the District of Columbia Bar for February 22nd is slated to discuss the application of Most Favored Nation treatment under international investment treaties. The MFN provision has engendered some controversy, as foreign investors have sought to "treaty shop" by invoking their entitlement to MFN treatment, and seeking to enjoy the most favorable treatment available in any of the various investment treaties concluded by a given host government. Speakers at the session will include: Abby Cohen Smutny, Partner, White and Case; Oscar M. Garibaldi, Partner, Covington and Burling; and Gary Sampliner, Senior Counsel, Office of the General Counsel, U.S. Department of the Treasury (International Affairs) The event is slated to take place from 12:30pm to 2:00 pm at the headquarters of the American Society of International Law, Tillar House, 2223 Massachusetts Ave, NW (DuPont Circle)

9 There is no charge for attendance. Please contact Ruth Teitelbaum at or Institute solicits proposals for human rights impact assessments of investment projects The Montreal-based International Centre for Human Rights and Democratic Development has issued a call for proposals from groups interested in conducting human rights impact assessments on international investment projects. The Centre is looking to test its draft human rights impact assessment methodology on at least three selected projects in the developing world, and is accepting proposals until March 31, Full information is available on the Centre's website at: 8. ICSID releases results of client survey The Washington-based International Centre for Settlement of Investment Disputes (ICSID) has released a report which summarizes the results of a recent stakeholder survey conducted for the ICSID by an outside consultancy. The survey process was designed to gather information about the perceptions of various stakeholders, including investors, governments and arbitrators. The report is available on-line at: To subscribe to INVEST-SD Bulletin, the editor at: lpeterson@iisd.ca Past issues of INVEST-SD News Bulletin available on-line at: Subscribers may submit news articles, notices of events, press releases, analyses, questions and requests for information to lpeterson@iisd.ca The opinions distributed in the INVEST-SD Bulletin do not necessarily represent the views of the International Institute for Sustainable

10 Development (IISD) or its partners or funders. Nor does the INVEST-SD News Bulletin purport to provide legal advice of any sort.