Richard Tanter Nautilus Institute for Security and Sustainability rtanter@nautilus
No Rights without Responsibilities: Redefining investment agreements towards binding Corporate...
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![Page 1: No Rights without Responsibilities: Redefining investment agreements towards binding Corporate Social Responsibility Sandy Buffett The Nautilus Institute.](https://reader036.fdocuments.in/reader036/viewer/2022072014/56649e7e5503460f94b82296/html5/thumbnails/1.jpg)
No Rights without Responsibilities:
Redefining investment agreements towards binding Corporate Social Responsibility
Sandy Buffett
The Nautilus Institute
NGO Private Finance Skills Share
Amsterdam: July 6, 2001
![Page 2: No Rights without Responsibilities: Redefining investment agreements towards binding Corporate Social Responsibility Sandy Buffett The Nautilus Institute.](https://reader036.fdocuments.in/reader036/viewer/2022072014/56649e7e5503460f94b82296/html5/thumbnails/2.jpg)
In wake of MAI, what’s going on with investment liberalization?
Bilateral: BITs (over 1,700 w/ 155 countries)
Regional: NAFTA’s Chapter 11, FTAA,
ASEAN investment forum Global: GATS, WTO working group on
investment
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Beneficiaries of investor rights agreements Corporations engaged in FDI
– I.e. Manufacturers, mining companies, oil companies, energy companies
– Financial services, I.e. insurance, mutual funds, commercial banks “setting up shop” overseas
PFIs & insurers engaged in international project finance
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What’s in the current investor rights “suitcase”
Basic: Nondiscriminatory rights: National
treatment, MFN Performance requirements Expropriation
Expanded: Dispute resolution
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Nondiscriminatory treatment
National treatment– foreign investors treated “no less favorably”than domestic investors
Most Favored Nation– all foreign investors treated equally
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Performance requirements
Governments will not set targets for local content
Governments cannot demand particular technologies (technology transfer) as a condition for investment
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Expropriation
Nationalization Seizing of property “creeping expropriation” or “takings”–
gov’t regulation results in an expropriation of business
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Dispute resolution
Most controversial aspect of investment agreements
Provides forum for investor-to-state arbitration
Rulings are binding and cannot be appealed
One-way: no remedy for civil society Non transparent process
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Where do investors take these cases? ICSID– International Center for Settlement of
Investment Disputes-most investment agreements rely upon
ICSID for binding arbitration -hears about 1 case each month
UNCITRAL– UN Commission on Int’l Trade Law MIGA– also authorized to promote & facilitate
investment agreements…for “the protection of investors”
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Where can NGOs take their case? Well… OECD voluntary guidelines National Contact
Point-Each OECD member has a designated NCP which serves as mediator, information disseminator-US NCP has never received a case from a NGO!
ICSID “amicus” briefs recently accepted from a NGO on Chapter 11 challenge
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Need to create a package of binding investor responsibilities
Disclosure– “International Right to Know”
Publicly-available EIAs for overseas operations
Reporting and verification mechanisms Legal redress for civil society
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Some guidelines which could be used for Investment Rules
OECD guidelines on multinational enterprises Universal Declaration of Human Rights ILO core labor standards WB pollution prevention
standards US OPIC categorical prohibitions ISO 14001 Global Sullivan Principles World Commission on Dams final report Social Accountability (SA) 8000
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What about the international capital markets?
Could either a single investment agreement framework or regulation at several entry points bring international portfolio flows into the domain of binding investment rules?
Currently regulated at national level Potential entry points for advocacy:
– International organization of Securities Commissions (IOSCO)
– Multidisciplinary Working Group on Enhanced disclosure (IOSCO, BIS, financial services reps)
How would it work?: investors would have to abide by the investor “responsibilities” in order to receive benefits of investor rights
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What rules for portfolio flows?
Harmonized disclosure & transparency requirements for SECs of the world
Increased corporate disclosure on material environment, social information
Disclosure rules for institutional investors (I.e. UK pension law)
Binding reporting mechanism (GRI?) Securities underwriters must use a minimum
standard of ethical due diligence
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Is the ICSID mechanism worth saving?
Should the dispute mechanism be scrapped or can it be made transparent?
Could we push for state-to-investor or NGO-to-investor remedy?
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In summary: Internationally recognized guidelines, such as the OECD
Guidelines, and reporting and disclosure mechanisms must be brought into the binding rules which govern investment to define not only investor rights, but a corresponding set of investor responsibilities.
Regulation within international investment agreements should be expanded from FDI to capital market instruments and actors.
In exchange for the benefits and protection investors receive under investor rights regimes, investors would be expected to behave responsibly and be held accountable for their overseas operations.