From a Norwegian draft model BIT (MS Word document) that reader Perry Bechky pointed me to:
Article 3: NATIONAL TREATMENT
1. Each Party shall accord to investors of the other Party and to their investments, treatment no less favourable than the treatment it accords in like circumstances[FN2] to its own investors and their investments, in relation to the establishment, acquisition, expansion, management, conduct, operation and disposal of investments.
[FN2] The Parties agree/ are of the understanding that a measure applied by a government in pursuance of legitimate policy objectives of public interest such as the protection of public health, safety and the environment, although having a different effect on an investment or investor of another Party, is not inconsistent with national treatment ... when justified by showing that it bears a reasonable relationship to rational policies not motivated by preference of domestic over foreign owned investment.
Here are a few initial thoughts on this provision.
First, my sense is that perhaps the footnote would only apply to situations involving de facto discrimination. De jure discrimination (i.e., explicit distinctions between foreign and domestic investors/investments) would be governed by the main text alone. But I'm not absolutely sure about this.
Second, the substance of the footnote indicates that disparate impact/discriminatory effect on foreign investment/investors will not lead to a violation of national treatment rules in all instances. Specifically, there will be no violation if the following conditions are met: (1) The measure pursues "legitimate policy objectives of public interest"; (2) the measure "bears a reasonable relationship to rational policies"; and (3) the "policies" at issue are "not motivated by preference of domestic over foreign owned investment." The first two elements seem to overlap; I'm not sure exactly how they relate to one another. The last element, the "motivation" behind the measure, involves intent. However, it's not clear what kind of intent the drafters had in mind, subjective or objective.
Third, what happens if there is no discriminatory effect on foreign investors/investments as a whole? Does that mean there cannot be a violation? There are WTO cases that have found a violation where one individual foreign product is treated unfavorably even though there is no overall discriminatory effect against foreign products. I wonder how the quoted provision would deal with the equivalent situation in the investment context. The reference to "an investment or investor" makes me think the "individual" test might be applied.
Fourth, it sounds like the burden is on the defending party to show that the measure "bears a reasonable relationship to rational policies not motivated by preference of domestic over foreign owned investment." So, the complainant first makes its claim of less favorable treatment, but the defending party can then respond with a defense of this kind.
Finally, I thought it was interesting that they put the footnote after "like circumstances." There is some disagreement over which part of the national treatment provision is the key, with some emphasizing the "less favorable treatment" part and others focusing on the "like"-ness part. By putting the footnote where they did, it seems that perhaps these drafters thought "like"-ness was the key.
