Investment Treaty Forum
Twelfth ITF Public Conference
Investment Treaties at 50: Host State Perspective
15 May 2009
Developing country challenges in
negotiating, implementing and
complying with BITs: trends and
outlook
Anna Joubin-Bret
Senior Legal Advisor
UNCTAD
TRENDS
Among the most important recent trends is the
increasing number and complexity of IIAs
→ risk that countries face overlapping and
sometimes inconsistent obligations
→ possibly detrimental to their policy
objectives
→ increased risk of investor-State disputes
Several factors: substantive, systemic,
subject-specific
200
180
160
140
120
100
80
60
40
20
0
3000
2500
2000
1500
1000
500
0
99
19
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
years
BITs Annual
DTTs Annual
BITs cumulative
DTTs cumulative
Cummulative BITs
Annual BITs
The network of BITs continues to
grow rapidly, there are now over
2500 BITs
BITs concluded by country group
4%
13%
25%
8%
10%
40%
Betw een developing countries
Betw een developed and developing countries
Betw een developing countries and countries of SEE&CIS
Betw een developed countries
Betw een developed and countries of SEE&CIS
Betw een countries of SEE&CIS
The top ten signatories of BITs in the
world, June 2008
Germany
China
Sw itzerland
United Kingdom
Egypt
Italy
France
Netherlands
Belgium and Luxembourg
Korea, Republic of
0
20
40
60
80
100
120
140
160
South-South BITs
47 South-South BITs in 1990
Over 700 in 2008
80
Number of South-South BITs
70
60
50
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Renegotiations

rise in renegotiation of BITs among countries

In 2008 eight additional BITs were renegotiated among
member countries

This brings the total number of renegotiated BITs to 132 by
the end of 2008

During the year, Czech Republic alone renegotiated five
BITs while Vietnam renegotiated two BITs

China and Germany lead the renegotiation process by 16
BITs each while Morocco and Egypt follow with eleven and
nine BITs respectively.
16
140
14
120
12
100
10
80
8
60
6
4
40
2
20
0
0
8
9
19 9 19 9
0
1
20 0 20 0
2
20 0
3
4
20 0 20 0
5
6
20 0 20 0
Years
Annual BITs
Cummulative BITs
7
8
20 0 20 0
Cummulative BITs
Annual BITs
Number of renegotiated BITs 1998 – 2008
Free Trade Agreements with
Investment Chapters
 International investment rules are increasingly being
formulated as part of agreements that encompass a
broader range of issues (including trade, services,
competition, intellectual property)
 Regional integration with investment disciplines:
ASEAN investment liberalization and protection
 The total number of such economic agreements with
investment provisions exceeded 254, as of June 2008
Over 250 trade agreements with
investment provisions
Number of IIAs other than BITs and DTTs
300
250
200
150
100
50
0
1957-1967
1968-1978
By period
1979-1989
1990-2000
Cumulative
2001-2008
Recent FTAs with investment
chapters






Free Trade Agreement between the EFTA States
and Canada
Free Trade Agreement between China and New
Zealand
Free Trade Agreement between Singapore and
Panama
Economic Partnership Agreement between
Japan and Thailand
Free Trade Agreement between the United
States and the Republic of Korea
EC-CARIFORUM Economic Partnership
Agreement
IMPLICATIONS
→ Countries and companies operate
within an increasingly intricate
framework of multi-layered and multifaceted investment rules, which may
contain overlapping and perhaps even
inconsistent obligations.
→ This may render economic policies of
host countries more complicated.
Several Factors



Divergent model agreements
Protection-oriented BITs and
liberalization-oriented FTAs
Compatibility/implementation at the
national level with national laws
Interactions Within an IIA



Cumulating interactions:
services/investment chapters in FTAs,
ISDS/general DS in the FTA
Contradiction interactions: policy-space
issues
Explication interactions: definitions or
exceptions with substantive provisions
Interactions With Other IIAs




Reinforcement interactions: servicesrelated provisions reinforcing GATs
The MFN provisions
Cumulating interactions: dispute
settlement provisions (FTAs/WTO)
Contradiction interactions: interactions
with State Contracts
CONSISTENCY:
DOMESTIC CONCERNS


The negotiation of IIAs includes interrelated and
complicated policy issues that, at least in
principle, touch upon a whole range of domestic
concerns.
(Ex.: social and environmental matters)
Balancing private and public interests:
• Protect host country interests: clarification, stronger
emphasis on public policy concerns, strengthen public
role in ISDS. Transparency.
• create a certain balance between rights and
responsibilities of investors.

Preserving regulatory flexibility to pursue national
policies.
Challenges for developing
countries

Developing countries and economies in transition often lack the necessary
human resources to negotiate agreements that appropriately reflect their
interests and needs

Risk of overlapping and sometimes conflicting commitments in IIAs

Implementing IIA obligations

Developing dispute prevention policies

Dispute management techniques

Strengthening the development dimension of IIAs