Norway has just published a new draft model BIT. It offers some explanations here. Here are some of my thoughts on a few of the provisions.
First up, national treatment:
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 situations1 to its own investors and their investments, with respect to the establishment, acquisition, expansion, management, conduct, operation and disposal of investments.
1 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, human rights, labour rights, safety and the environment, although having a different effect on an investment or investor of another Party, is not inconsistent with national treatment and most favoured nation treatment when justified by showing that it bears a reasonable relationship to rational policies not motivated by preference of domestic over foreign owned investment.
I like the clarification in the footnote, and I think this provides a good basis for a non-discrimination obligation. But let me just quibble over two minor issues. First, I wish that the footnote came after "treatment no less favourable," rather than "like situations." In my view, you have to torture logic and language to get these concepts into likeness, and it's not necessary to do so because they fit so naturally with treatment. Second, the "when justified" language seems like it might put the burden of proof on the respondent on this issue, and I'm not sure that's the best approach.
Next, the minimum standard of treatment reads as follows:
ARTICLE [5] GENERAL TREATMENT AND PROTECTION
Each Party shall accord to investors of the other Party, and their investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security.
As I've said before, I don't think we need this provision at all, and I'm not convinced that the reference to customary international law is sufficiently limiting. However, later on, there are some exceptions that do provide additional limits:
ARTICLE [24] GENERAL EXCEPTIONS
Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between investments or between investors, or a disguised restriction on international [trade or] investment, nothing in this Agreement shall be construed to prevent a Party from adopting or enforcing measures necessary3:
i. to protect public morals or to maintain public order;4
ii. to protect human, animal or plant life or health;
iii. to secure compliance with laws and regulations that are not inconsistent with the provisions of this Agreement;
iv. for the protection of national treasures of artistic, historic or archaeological value; or
v. for the protection of the environment
3 For greater certainty, the concept of ”necessity” in this Article shall include measures taken by a Party as provided for by the precautionary principle, including the principle of precautionary action.
4 The public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society
I'm not sure I understand footnote 3 at all. Wouldn't these exceptions have applied to precautionary measures anyway? How does footnote 3 add anything to the analysis? Are they saying that if you invoke the precautionary principle, your measures automatically qualify as necessary?
And let me also note that I think "reasonable relationship," as used in FN. 1 under National Treatment, works better than "necessary."
Finally, there is this:
ARTICLE [12] RIGHT TO REGULATE
Nothing in this Agreement shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Agreement that it considers appropriate to ensure that investment activity is undertaken in a manner sensitive to health, safety, human rights, labour rights, resource management or environmental concerns.
Clearly, this provision is not a real exception and will have little or no impact, because it only applies to measures "otherwise consistent with this Agreement." More generally, I think the use of the term "right to regulate," in the abstract, may be doing more harm than good. The ability of a government to regulate consistently with an international agreement is determined by the substantive obligations, mainly those on national treatment, minimum standard of treatment, and expropriation. For me, as I've said many times, minimum standard of treatment is the key here. Taking out this standard entirely would mean the least interference with the ability to regulate; a standard based on "outrageous" conduct would mean only a little interference with the ability to regulate; and a standard based on "arbitrary" or even "manifestly arbitrary" conduct would mean quite a bit of interference with the ability to regulate. Thus, the focus of concerns about regulatory autonomy needs to be on the substance of these provisions, not on provisions like Article 12 above or the preambular language on this issue in the CETA.
