International

Investment

Treaties in

South America

November, 2008

Decrease in the negotiation of IIA

• Global decrease in IIA negotiations – Latin America and the Caribbean considered as the least active region

• 61 IIA – concluded since 2007 – until June 2008

• Only 8 IIA (aprox.) are from South American countries

• FTA Australia - 2008

Chile

• FTA Canada - 2008

• FTA Singapore - 2008

Peru

• BIT Peru - 2007• FTA Canada -

2008• FTA EFTA - 2008

Colombia

South American countries with an active agenda in negotiations

• Withdraw from the ICSID – Nov 2008

• 3 cases in arbitration

Bolivia

• 46 investment treaty claims in international arbitration - December 2007

Argentina

• Denounced 9 BITs from 25

• Currently consent to ICSID is no available for disputes arising from mining and oil contracts

• Is woking on a Model of Investment agreement

• 9 cases in arbitration

Ecuador

Countries rethinking the utility of IIA for attraction of investments

• Consent to ICSID is no available for disputes arising from mining and oil contracts

• Denounced BIT with Netherlands

• 7 cases in arbitration

Venezuela

Structure and Standards included in

Investments Treaties

Main Structure of IIA

• Definition of investment – broad, including “characteristics of an investment”

• Includes pre and post establishment – including in definition of investor an indication of what “seek to make an investment” mean

• Tendency to negative lists but depends on the negotiation – consolidation of non conforming measures, so the States cannot introduce new measures, except for the future reservation made in the treaty.

Main Standards Included

• National Treatment in every stage of the investment• Inclusion of “like circumstances” in treatment clauses• Inclusion of the “Mafezzini” footnote• Fair & Equitable Treatment - reference to “customary

international law”, and to the minimum standard of treatment of aliens. Including “F&E Treatment” and “Full protection and security” definitions.

• Prohibition of Performance Requirements• Includes an explanation of indirect expropriation and a

provision that states an exception for indirect expropriation in cases of measures adopted to protect public welfare objectives

Investor – State Dispute Settlement Mechanism

• Investor can claim for any breach of the obligations under the agreement, if that breach generates a loss or damage

• Negotiations and consultations• Obligation of present “notice of intent”• 3 years should elapse since investor acquire

knowledge of loss or damage• Fork on the road• Consent of the state for ICSID• The final and binding effect of the award

Peru - Provisions to respond and coordinate internally in potential international

investment disputes

• Constitutes a Commission for representing the state in the dispute, since the stage of consultations – ask for information, hire lawyers, incorporate the entities involved

• States the obligation of public entities to provide information if they are informed by any means of a potential investor – state dispute settlement

• States the obligation of all the entities of the state to provide information regarding all contracts, agreements, etc. that includes international mechanisms of settlement of disputes clauses

Oportunidades de Inversión

Different Models of IIA´s Agreements

UE and EFTA Model

• GATT Model• Positive lists• Commercial presence - includes not only pre

establishment but also “maintenance”• Less is better – Europe Style • No protection standards – just treatment• No investor-state dispute settlement mechanism• No consolidation of Non-conforming measures,

possibility of inclusion of “new measure”

Facing this different model

• Different structure – other standards

• GATT definitions

• “like circumstances” / “like services”

• Exceptions included in General Exceptions – no much precisions

Conclusions and Future Challenges

• Evaluate the possibility of renegotiate old treaties

• Be precise and clear in the drafting of clauses in an IIA´s

• Deal with the inconsistencies of different models signed

• Be internally prepared for managing disputes• Deal with the balance considered in an FTA

negotiation that is different from the balance within a BIT negotiation – the negotiation of FTA´s is increasing

THANK YOU