Environmental Engineering Reference
In-Depth Information
This proposed model IIA, which emerged from a consultative process spearheaded by
the Canadian-based International Institute for Sustainable Development (IISD), is being
studied by the OECD and has been favorably received by several LDCs that are currently
in BITs negotiations. In other quarters, it has met with criticism. Predictably, business
interests have responded critically to the suggestion that investors should be subjected to
a
rmative duties or that they should be obliged to resort to domestic courts (Anderson
and Grusky, 2007). Moreover, some NGOs active around trade and investment issues
have also criticized the model for preserving the right of investors ultimately to pursue
claims directly against host states (ibid.).
Another variation on the 'exhaustion of remedies' approach embodied in IISD's model
would be to require investors to apply to their home government for approval to proceed
to arbitration. This approach has reportedly secured the support of several key
Congressional leaders, including former presidential candidate John Kerry (Franck,
2005). An even more restrictive approach would be to require the investor to secure the
advance approval of both its home and its host governments. For some reformers,
however, the only acceptable model for future agreements is to abolish investor suits and
return to the old mechanism under which investment disputes were brought on a state-to-
state basis, as currently prevails in trade disputes. Supporters of this 'abolitionist'
approach invoke the Australia-US Free Trade Agreement of 2004 (AUSTFA). Under
AUSTFA, a state-to-state investment dispute resolution process was ultimately agreed to
due to Australian concern to avoid replicating the 'experiences of Canada and United
States under NAFTA Chapter 11' (Dodge, 2006, p. 2).
Considerable attention and debate have also focused on how to enhance the e
cacy and
predictability with which the prevailing IIA regime operates. Given the breadth and per-
vasiveness of this regime, the incremental bene
t of reform proposals that focus exclu-
sively on the nature of and rules governing future agreements will be necessarily limited.
In recognition of this dilemma, some have called for reforms that would allow domestic
courts to assume a much greater supervisory role over rulings arising under current IIAs
by empowering them to review arbitral decisions for errors of law and jurisdiction. This
approach, critics argue, represents a minimum that is required 'to ensure independence
and accountability in the interpretation of public law and in the award of public funds to
private businesses' (Van Harten, 2007). However, such an approach is likely to lead to con-
sistent results both due to the necessity for coordinated action throughout IIA regime
states, and the ingrained tendency of courts to defer to arbitral awards, particularly in the
international setting. For these and other reasons, reformers increasingly favor a strategy
that would see the establishment of an international court with comprehensive jurisdic-
tion over the adjudication of investor claims (ibid.). This court would assume jurisdiction
based on an opt-in model that would allow states to attorn to its jurisdiction 'when the
time is right for each' (ibid.). Given the enduring controversy and uncertainty surround-
ing the current IIA regime, both capital-exporting and -importing states would appear to
have strong incentives to become closely engaged in the negotiation and development of
such a model.
fi
References
Anderson, S. and S. Grusky (2007),
Challenging Corporate Investor Rule
,Food & Water Watch, Institute for
Policy Studies, available at http://www.ips-dc.org/reports/070430-challengingcorporateinvestorrule.pdf.
