Discover the dark side of Investment

27 June 2012

Introduction to the international investment regime, including key facts, links to useful resources and ideas for action.

Signing international investment treaties, in the hope of attracting foreign investment, has been a central strategy for governments looking to improve economic development. The lesser known side of this story is that by signing investment treaties, governments are giving away the sovereign right to regulate in the interest of people and the environment and have exposed themselves to expensive law suits.

To start with:

Going deeper:

Toolkit for action

to start with

VIDEO

Companion BRIEFING

 

did you know?

The number of Investment Agreements signed has increased sharply in the last decade

While in 1989 there were only 385 Bilateral Investment Treaties (BITs); today 2807 BITs have been signed worldwide.
In 2010, more than 3 investment treaties were concluded each week

European countries are far ahead in signing Bilateral Investment Treaties (BITs)

The EU alone holds 1300 BITs, an incredible 46% of the total amount.

There has been a massive boom of investor-state cases in the last decade.

 

 

The total number of known cases filed by TNCs against States reached 450 in 2011

 figure 1

Developing countries in general, and Latin America in particular, receive the highest amount of law suits (litigations).

According to UNCTAD, “at least 89 governments have responded to one or more investment treaty arbitration: 55 developing countries, 18 developed countries and 16 countries with economies in transition. The largest number of claims were filed against

  1. Argentina (51 cases)
  2. Venezuela (25) 
  3. Ecuador (23) 
  4. Mexico (19)
  5. Czech Republic (18)
Western European Countries have received the least amount of litigations
Only 6 until 2010

France 1, Germany 1, Portugal 1, Spain 1 and United Kingdom 2.

How many times have international tribunals ruled against the US?

None.

There are 20 known law suits against US. From those cases, 4 cases are still pending and all the rest have either being dismissed, discontinued or the Tribunal ruled in favour of the US.

What is the International Tribunal that rules on most of the cases?

The majority of cases are brought under the International Centre for Settlement of Investment Disputes (ICSID), institution of the World Bank Group that provides facilities for arbitration of investment disputes.

According to UNCTAD, out of the total 450 known treaty-based cases by 2011, 279 cases were brought under ICSID.

What are the key sectors of the economy that have been at the centred of law suits by corporations?

 

From all cases registered under the ICSID , 44% of all cases are related to natural resources extraction and public services (25% in oil, gas & mining sector, 13% in electric power & other energy sectors and 6% in the water sector)
What is the one country that never signed a BIT and yet receives the highest amount of FDI in the whole of South and Central America?     Brazil

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going deeper

tni-reports-investment

Dangerous Weapons (June 2012)
Joint briefing by TNI, Network for Justice in Global Investment, Democracy Center, Redes and Fundacion Solon
A summary of how international investment rules undermine social and environmental justice citing examplary cases from Bolivia, Algeria, Germany and El Salvador.

The Dark side of Investment Treaties (December 2011)
Cecilia Olivet
Accompanying briefing to the video animation

Legalised Profiteering (November 2011)
Nick Buxton
How corporate lawyers are fuelling an investment arbitration boom.

The implications of international investment treaties (November 2011)
Video Interview with Gus van Harten
Associate Professor at York University, Canada, and author of the book, Investment Treaty Arbitration and Public Law (OUP, 2007), Gus Van Harten discusses specific cases of investor-to-state arbitration to highlight what are the key problems with international investment treaties.

Video: Global Investment Rules: Threat to Democracy and the Environment (November 2011)
Network for Justice in Global Investment with TNI
Excellent ten minute documentary introduction to the problems of the current international investment regime and the Network for Justice in Global Investment.

in-depth-resources-investment

 List of other relevant material
  • Investment Treaties & Why they Matter to Sustainable Development: Questions & Answers, International Institute for Sustainable Development (IISD), December 2011 (pdf)
  • Mining for Profits in International Tribunals, Institute for Policy Studies, November 2011 (pdf)
  • The legal monster that lets companies sue countries (November 2011) 
  • International Investment Law and Sustainable Development: Key cases from 2000–2010 (2011) + all other IISD Publications on investment
  • Sleeping Lions. International investment treaties, state-investor disputes and access to food, land and water, Oxfam International, May 2011 (pdf)
  • Investment Treaty Arbitration and Developing Countries: A Re-Appraisal, TUFTS University, May 2011 (pdf)
  • Foreign Investment and Sustainable Development: Lessons from the Americas, TUFTS University, May 2008 (pdf)
  • Challenging Corporate Investor Rule. How the World Bank’s Investment Court, Free Trade Agreements, and Bilateral Investment Treaties have Unleashed a New Era of Corporate Power and What to Do About It, Institute for Policy Studies, April 2007 (pdf)

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recommended-eu-investment-policy

Official EU Documents

Critical analysis of EU Investment policy
Analysis of the EU mandates to negotiate investment chapters in FTAs

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toolkit-for-action

doing-your-research

Do you want to know how many BITs your country has signed and with whom?

Do you want to know how many times  your country has been sued by TNCs?

List of databases where known investor-state cases can be accessed

Questions you can pose to your goverment
  • Does my country have a national investment policy(ies)? And if so, does it safeguard my government’s space to regulate?
  • Is my government currently negotiating investment agreements? If so, with who?
  • Is my government taking any type of measures to challenge the current rules of investment protection of transnational corporations (TNCs)?
  • Has my government taken a public stand against or in support of investor-to-state disputes?
  • Which sectors in my country are likely to be threatened by investor protection agreements (BITs, or investment chapters in FTAs): finance, public services, environment, public health, others?

Download and use as you wish two high resolution cartoons about the international investment regime

(Click on the image to download high resolution)

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questions-for-politicians

Who you can ask questions to:
  • President/Prime Minister
  • Ministers/Secretaries (development, labour, health, employment or climate/environment)
  • Regional or local governments since any measure by any authority is potentially threatened by private investors under BITs
Suggested questions:
  • Question 1: Is the sovereignty of our country to take general legitimate measures in the general interest and the protection of our environmental and social standards not threatened by the existing BITs binding our country?
  • Question 2: Do you think that the current BITs signed by our country include a good balance between investors rights and our government’s right to regulate for legitimate public concern policies, without the threat of being sued by corporations?
  • Question 3: Shouldn’t corporations be responsible for the business choices they make and bear the risks when things go wrong, just as small and medium enterprises (SMEs) have to?
  • Question 4: In the light of many studies that have concluded that investment treaties are neither necessary not sufficient for attracting foreign investment, does the government have evidence that by signing IIAs our country will attract more FDI?
  • Question 5: In the light of many studies which have concluded that foreign investment has fallen far short of stimulating broad-based economic growth and environmental protection, does the government have evidence that FDI coming into our country has had a positive effect on development?

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networks

In 2011, Seattle to Brussels network organised several actions to demand a change in EU Investment policy.

If you would like to find out about future actions organised by S2B, send your email address to ceciliaolivet@tni.org

An online petition was launched in March 2011 calling for "No New Corporate Privileges - Change EU Investment Policy Now!" . The petition was made available in EnglishGermanSpanish, FrenchDutch and Italian and was signed by over 3000 people

A statement calling for a "Just EU Investment Policy now!" was developed and launched in March 2011. The statement is available in English - Italian - French - Spanish - Dutch and German and was signed by 114 EU civil society organisations, three international networks and 65 non-EU organisations (full list here). Both statement and petition were sent to 736 Members of the European Parliament on 4th April 2011. 

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newsletters

Newsletters on investment issues you can sign up to

Websites with valuable resources on international investment regime

Recent publications from Trade & Investment

Trading away Democracy

The Investor-state dispute settlement mechanism in the far-reaching economic integration agreement between Canada and the European Union prevents governments from acting in the public interest.

The case of Newmont Mining vs Indonesia

The case of Newmont Mining vs Indonesia is a powerful example of how investment agreements are used by companies to get exemptions from government regulations and legislation, undermining democracy and development.

Big Corporations, the Bali Package and Beyond

This sequel to the “Tailored for Sharks” report delves deeper into the role the World Trade Organization (WTO) and its legal system play in the corporate architecture that benefits and protects interests of Transnational Corporations (TNCs); details concrete examples of TNCs behind trade disputes; and presents the post-Bali corporate roadmap. 

Land grabbing under the Cover of Law

The BRICS are following the pattern traditionally adopted by Northern countries of enclosing and exploiting land, both nationally and abroad, to benefit capital and global agro-industrialisation. They are also using law and diplomacy, notably Bilateral Investment Agreements, in order to facilitate access to foreign land, and foster their own economic interests.