On 2-4 November 2008 a group of approximately 50 representatives of developing country governments met in Marrakesh, Morocco for the Second Annual Forum of Developing Country Investment Negotiators. The forum was organized by IISD, the South Centre and the Moroccan Department of Investment.

The forum followed on from the first annual forum of developing country investment negotiators, held in Singapore in October 2007.

Participants at the second annual negotiators’ forum included government investment negotiators from countries as diverse as Burkina Faso, Indonesia, Ecuador, China, Sudan, Iran, Peru, Syria and Swaziland, to name a few of the approximately 40 countries that took part.

Speakers included representatives of developing country governments sharing their firsthand experiences in investment treaty negotiations and investment arbitrations; representatives of regional organizations negotiating development-minded international investment agreements; law professors specializing in international investment law; and experts from the South Centre and IISD.

The forum opened with a thought-provoking address by the former Attorney-General of Pakistan who described his country’s experience when faced with its first investment treaty arbitration. He said that, like many countries, Pakistan had signed bilateral investment treaties (BITs) because it was fashionable to do so and under the impression that BITs would not “bite”. He noted that this impression had since been dispelled by the various high-value investor claims that Pakistan has since faced, several of which sought more than Pakistan’s annual health and education budget combined. He described the difficulty for a host state in mounting a defence to an investor’s claim when it has little expertise in the area and government record-keeping of treaty negotiations and of investor communications is poor. Although he did not discount that arbitration can be a useful tool, he expressed concern with the current way in which three private lawyers sitting as the arbitral tribunal have more power than the host state’s highest court. He also expressed concern about the intrusive powers that tribunals have to access government files.

The forum had six sessions, each opening with speakers with experiences to share in that area followed by questions and comments by participants. Topics discussed included: 

·         Recent developments in investment negotiations in bilateral, regional and multilateral treaty instruments

·         Recent developments in the definition of investment and other key terms and the importance of defining terms and concepts in international investment agreements

·         Recent developments in investor-state arbitration rules and procedures and the importance of transparency in the investor-state arbitration

·         Defining investor obligations and ensuring development policy space for host countries

·         The need to be aware of the linkages between international investment treaties and investment contracts

·         The opportunities and obstacles in international investment agreements for addressing climate change and clean energy

A number of up-to-the-minute background papers were prepared for the forum and these, together with the forum agenda, are available here.

Some of the key points noted during the forum were:

·         As there are now more than 2,600 bilateral investment treaties (BITs) worldwide, BITs are a fact of life for most developing countries – they cannot not easily escape them.

·         The fundamental function of investment treaties is to keep the balance between investors and host states. There is a need to rebalance treaty rights and obligations to take account of host states’ right to development and to regulate in their own interest.

·         It is important to negotiate investment treaties for the specific needs of one’s own country and not to accept other countries’ model treaties without careful negotiation.

·         During negotiations, treaty provisions should not be accepted without carefully understanding their meaning and their interaction with other provisions in the treaty (as well as their effect on the country’s other investment treaties through the “most favoured nation treatment” standard).

·         Although some arbitral tribunals have recognized investor obligations and the importance of development policy space for host states, the lack of precedent in international arbitration means that the only certain way to ensure these issues are addressed is through express provisions in the treaties.

·         It is necessary to understand how investment contracts can interact with investment treaties to expand host states’ treaty obligations, eg through treaty umbrella clauses.

·         International investment agreements may potentially be used to help to address climate change and clean energy needs but they may also present obstacles in doing so. Coordination between investment and climate change negotiators would help to address these points.

There was strong support from participants for the need for a third annual negotiators’ forum. Subject to funding, this will be held in Ecuador in fall 2009.