Third World Network:
Allowing the investor only to sue the host government at an international tribunal significantly shifts the balance in favour of companies and away from public interest and the right to regulate. Given the broad definition of ‘investment’, the loose definition of ‘investor’ that still allows room for treaty shopping and the strong protections of investors, this opens governments, including the US government, to being sued for many ordinary regulations in the public interest. This can already be seen in the number of cases brought by investors against the US government under NAFTA.
Chevron:
We note that the availability of an investor-state arbitration mechanism increases the
likelihood that good faith negotiations can be successfully and equitably concluded. This
is an important point that cannot be overemphasized. The presence of a treaty enables the
investor to pursue more meaningful discussions with a host government and settle most
disputes on an equal basis.
Coalition of Service Industries:
If any changes are contemplated, CSI recommends that the Model BIT incorporate, or continue to incorporate, the following principles:
- The investor-state arbitration mechanism. This is one of the most crucial elements of a sound investment regime. The investor-state dispute settlement mechanism can ensure U.S. investors that their investments are protected against arbitrary, discriminatory and unfair government actions. Any changes to these provisions must strengthen and clarify the rights of investors abroad to encourage investment flows into and out of the United States.
Gus Van Harten:
Reform the dispute settlement regime:
• consider removing the investor-state regime outright from U.S. BITs;
• as a temporary measure to ensure independence, designate a roster of experts – preferably sitting judges – from which presiding arbitrators (or all arbitrators) must be chosen;
• establish a regional adjudicative body to replace or supplement the role of private arbitration, and to ensure independence and enhance coherence in the decision-making process;
• provide for the members of the regional adjudicative body to develop rules to govern the resolution of investor-state disputes;
• provide for standing in the process for persons or entities whose interests are directly affected by an investor-state dispute, and allow states to bring counter-claims against foreign investors for breaches of their own duties or obligations.
Stephen Canner, U.S. Council for International Business:
The importance of making investor-State arbitration available as a key part of a BIT does not depend on the quality of a BIT partner’s legal system. Even if a country’s legal system is highly regarded, the prospect of a foreign investor having to support its claim against the host government in a local court is a daunting prospect. It will require a reliance on local counsel and experts familiar with local procedures and customs. Even if the investor prevails, its judgment may be subject to multiple layers of appeal. And, even if the local judiciary is regarded as fair, the investor may well be trying its case in a hostile environment, which may affect the proceeding in subtle and unpredictable ways. The option of recourse to a neutral forum avoids these problems, giving the investor some assurance that it will have a reasonable chance at being compensated for any harm it has suffered.
Todd Tucker, Global Trade Watch:
One of the most controversial provisions of BITs and the investment chapters is the investor-state dispute resolution mechanism. As we have seen under NAFTA, the investor-state mechanism has been used to challenge legitimate public-interest measures. It should be sufficient that an investor make use the domestic legal systems to bring a claim or, if not satisfied, push his/her respective government for state-state dispute settlement. The state-state approach has precedent in the U.S-Australia FTA. The above amendments limit to U.S. law the standards that would be applied by investor-state tribunals. However, the above fixes do not remedy the core violation of the no-greater-rights standard – which is the very opportunity for a foreign investor operating within the United States to seek remedy before an investor-state tribunal, while U.S. investors and firms are limited to seeking remedy in U.S. courts. To remedy the violation of the no-greater-rights standard, the Model BIT’s Section B (Articles 23-36) and the Panama FTA Investment Chapter’s Section B (Articles 10.15-10.27) must be stricken. Government-government enforcement action, based on the renegotiated terms described above, would provide recourse for actual acts of direct expropriation, while safeguarding legitimate public-interest laws from challenge and ensuring foreign investors are not provided greater rights than domestic investors operating domestically.
Emergency Committee for American Trade:
It is critical, as well, that the investment chapter include a strong investor-state dispute settlement mechanism, as developed in the Model BIT, to ensure objective and full resolution of investors’ individual disputes that are covered by the FTA.