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YEARBOOK ON INTERNATIONAL INVESTMENT

LAW & POLICY2013–2014

Bjorklund13-14_040215OUS_Book.indb 1 6/20/2015 11:53:36 AM

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Yearbook on International Investment Law & Policyandrea k. bjorklund, editor

L. Yves Fortier Chair in International Arbitration and International Commercial Law, Mcgill University Faculty of Law, Montreal

Senior Fellow, Columbia Center on Sustainable Investment(CCSI), New York

Daniel Litwin, Managing EditorResearch Fellow, CCSI

Advisory Board

José E. AlvarezNew York University School of Law, New York City

Rudolf DolzerUniversity of Bonn

Emmanuel GaillardShearman & Sterling LLP, Paris

Gabrielle Kaufmann-KohlerUniversity of Geneva Law School

Andreas F. Lowenfeld, d. June 2014New York University School of Law, New York City

Theodore H. MoranGeorgetown School of Foreign Service, Washington, D.C.

Daniel M. PriceRock Creek Global Advisors LLC, Washington, D.C.

Manfred SchekulinAustrian Federal Ministry of Economy, Family and Youth, Vienna

Stephen M. SchwebelIndependent Arbitrator and Counsel, Washington, D.C.

Detlev F. Vagts, d. August 2013Harvard Law School, Cambridge

Louis T. WellsHarvard Business School, Boston

George A. BermannColumbia Law School, New York City

Ahmed S. El KosheriKosheri, Rashed and Riad, Cairo

Michael Hwang, SCBarrister & Arbitrator, Singapore

Carolyn B. LammWhite & Case LLP, Washington, D.C.

Petros C. MavroidisColumbia Law School, New York City

Jan PaulssonFreshfields Bruckhaus Deringer LLP, Paris

W. Michael ReismanYale Law School, New Haven

Christoph SchreuerZeiler Partners, Vienna

Muthucumaraswamy SornarajahNational University Singapore Law School

Francisco Orrego VicuñaHeidelberg Center, Santiago

Karl P. Sauvant, Founding Editor of the YearbookColumbia Center on Sustainable Investment, New York

Editorial CommitteeN. Jansen CalamitaInvestment Treaty Forum,British Institute of International and Comparative Law, London

columbia law school editorial staff

v. grace davis, editorgabriela lopez, editor

farrukh malik, editorclaudie tirefort, editor

hiroyuki ota, editorniccolò pietro castagno, senior editor eno usoro, senior editor

Lise JohnsonCCSI, New York

Ucheora OnwuamaegbuArent Fox, LL.P., Washington, DC

Lisa E. SachsCCSI, New York

Peter MuchlinskiSchool of Oriental and African Studies Law School, London

Federico OrtinoKing’s College London School of Law

Abby Cohen SmutnyWhite & Case LLP, Washington, D.C.

mcgill university faculty of law editorial staff sarah kettani, editor david st-onge, editor

adam plenkiewicz, editoralexander spraggs, editor lukas vanhonnaeker, editor


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Peer Reviewers

The Editorial Committee of the Investment Yearbook thanks all those who helped in the preparation of this publication and especially the peer reviewers, who include:

Reuven Avi-YonahLorand BartelsBertram BoieJonathan BonnitchaAnna Joubin-BretLee M. CaplanAaron CosbeyRudolf DolzerZachary DouglasMike GerrardAndrew GuzmanJustin Jacinto

Josh KallmerMark KantorMeg KinnearCéline LévesqueRoberto Aguirre LuziKate MilesTimothy NelsonLuke NottageMartins PaparinskisJoost PauwelynMiguel PerezMatthew Porterfield

Jeswald SalacuseKarl SauvantJeremy SharpeMuthucumaraswamy

SornarajahMargrete StevensLeon TrakmanAnne van AakenSamuel WordsworthKatia Yannaca-Small


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COLUMBIA CENTER ON SUSTAINABLE INVESTMENT

The Columbia Center on Sustainable Investment (CCSI) is a leading applied research cen-ter and forum for the study, practice and discussion of sustainable international investment. The CCSI focuses on analyzing important topical policy-oriented issues and constructing and implementing an investment framework that promotes sustainable development and the mutual trust needed for long-term investments that can be practically adopted by governments, companies and civil society. The Center undertakes its mission through interdisciplinary research, advisory projects, multistakeholder dialogue, educational programs, and the devel-opment of resources and tools. The Center’s website is found at http://ccsi.columbia.edu/.


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YEARBOOK ON INTERNATIONAL

INVESTMENT LAW & POLICY

2013–2014

EDITED BY

Andrea K. Bjorklund


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1Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide.Oxford New YorkAuckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur MadridMelbourne Mexico City Nairobi New Delhi Shanghai Taipei TorontoWith offices inArgentina Austria Brazil Chile Czech Republic France Greece Guatemala HungaryItaly Japan Poland Portugal Singapore South Korea Switzerland ThailandTurkey Ukraine VietnamOxford is a registered trademark of Oxford University Press in the UK and certain other countries.Published in the United States of America byOxford University Press198 Madison Avenue, New York, NY 10016

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ISBN 978-0-19-026577-9

Printed in the United States of America on acid-free paperNote to ReadersThis publication is designed to provide accurate and authoritative information in regard to thesubject matter covered. It is based upon sources believed to be accurate and reliable and is intendedto be current as of the time it was written. It is sold with the understanding that the publisheris not engaged in rendering legal, accounting, or other professional services. If legal advice orother expert assistance is required, the services of a competent professional person should besought. Also, to confirm that the information has not been affected or changed by recentdevelopments, traditional legal research techniques should be used, including checking primarysources where appropriate.(Based on the Declaration of Principles jointly adopted by a Committee of theAmerican Bar Association and a Committee of Publishers and Associations.)

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TABLE OF CONTENTS

Submission Policy xxv

Contributors xxvii

Foreword by Louis T. Wells xxxiii

Preface by the Editorial Committee xxxvii

PART ONE

1. Trends in International Investment and the Activities of Multinational Enterprises: 2013–2014 3

Michael V. Gestrin

2. International Investment Agreements, 2013: A Review of Trends and New Approaches 25

Lise Johnson and Lisa Sachs

3. International Investment Law and Arbitration: 2013 in Review 69

Ian A. Laird, Borzu Sabahi, Frédéric G. Sourgens, Nicholas J. Birch, Kabir Duggal, and Joanna Coyne

PART TWO

British Institute of International and Comparative Law

Introduction 155

N. Jansen Calamita


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viii Table of Contents

4. The Principle of Proportionality and the Problem of Indeterminacy in International Investment Treaties 157

N. Jansen Calamita

5. Proportionality, Reasonableness, and Standards of Review in Investment Treaty Arbitration 201

Valentina Vadi

6. Role of Investors’ Legitimate Expectations in Defense of Investment Treaty Claims 229

Claudia Annacker

PART THREE

General Articles

7. Balancing Investor Protection and Regulatory Freedom in International Investment Law: The Necessary, Complex, and Vital Search for State Purpose 251

Jürgen Kurtz

8. Jurisprudential Interaction between ICSID Tribunals and the International Court of Justice 305

Jure Zrilič

9. The Migration of Constitutional Ideas: The Strange Case of Proportionality in International Investment Law and Arbitration 337

Valentina Vadi

10. Inconsistency in Investor-State Awards and the Role of State Interpretations: The Example of the Mexican Sweetener Trio of Cases under NAFTA 361

Céline Lévesque

11. States Strike Back—Old and New Ways for Host States to Defend against Investment Arbitrations 401

Lars Markert and Catharine Titi

12. Revisiting the Countermeasures Defense in Investor-State Disputes: Approach and Analogies 437

Preeti Bhagnani

13. The Political Economy of Crises and the International Law of Necessity after the Great Recession 473

Alberto Alvarez-Jimenez


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Table of Contents ix

14. Minilateral Treaty-Making in International Investment Law 507

Maninder Malli

15. Do Investment Promotion Agencies Promote Bilateral Investment Treaties? 529

Jason Yackee

16. The Trend toward Open Contracting: Applicability and Implications for International Investment Agreements 553

Lindsey Marchessault and Michael Jarvis

17. New Regulations on Foreign Acquisitions of Land in Brazil and Argentina 569

Martin Delaroche

PART FOUR

Special Section: Winning Memorials from the 2013 Foreign Direct Investment International Moot Competition (FDI Moot)

18. Winning Claimant Memorial: National Law University, Delhi 621

19. Winning Respondent Memorial: University of Buenos Aires 655


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DETAILED TABLE OF CONTENTS

Submission Policy xxv

Contributors xxvii

Foreword by Louis T. Wells xxxiii

Preface by the Editorial Committee xxxvii

PART ONE

1. Trends in International Investment and the Activities of Multinational Enterprises: 2013–2014 3

Introduction 3

A. Trends 4

1. Global Overview 4

2. Regional Trends 7

3. Foreign Direct Divestment 9

B. Vectors of Structural Change in the Global Investment System 12

1. The Rise of the MNSOE 12

2. International Investment and Global Value Chains 17

Conclusions 20

2. International Investment Agreements, 2013: A Review of Trends and New Approaches 25

Introduction 25

A. Public Debate on Investment Policy 28

B. The “Other” IIAs 31

1. Investor Protections 32

a. Substantive Protections 32

b. Procedural Protections 35


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xii Detailed Table of Contents

2. Investment Promotion, Economic Cooperation, and Sustainable Development 38

a. Effective Enforcement, Non-derogation, and Non-lowering of Environmental or Labor Standards 39

b. New Development: Non-Waiver of the Right to Regulate in the Public Interest 41

c. Strengthening of Standards and Their Implementation 42

d. Economic Development 43

e. Consultations, Compliance, and Enforcement 45

3. The Larger Picture 48

C. Canada in Africa: Heightened BIT Activity That Tracks Investments in the Extractive Industries 52

1. Performance Requirements 54

2. Protection against Breach of Investor-State Contracts 56

3. Incorporating Considerations of Domestic Policy and Corporate Social Responsibility in Investment Treaties 58

D. The UNCITRAL Transparency Rules and Convention 59

1. Content of the Transparency Rules 61

2. Application of the Transparency Rules 61

3. The Transparency Convention 62

4. A Model for Broader Reform? 64

Conclusion 64

3. International Investment Law and Arbitration: 2013 in Review 69

A. Jurisdiction 69

1. Jurisdiction Ratione Materiae 73

a. Abuse of Process 73

b. Treaty Standards 77

i. Allegations of Illegality 77

ii. ICSID Convention 84

iii. Territorial Link 87

iv. Sovereign Bonds 90

2. Jurisdiction Ratione Voluntatis 91

a. Subject-Matter Limitation of Investment Treaty 91

b. Mass Claims/Multi-Party Proceedings 92

c. Jurisdiction by Means of Most-Favored Nations Clauses 94

B. Merits 100

1. Fair and Equitable Treatment 102

a. Legitimate Expectations 105

b. Proportionality 110

c. Denial of Justice 111

d. Discriminatory and Arbitrary Treatment 112


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Detailed Table of Contents xiii

2. Full Protection and Security 113

3. Umbrella Clause 114

4. Expropriation 115

C. Compensation and Non-pecuniary Remedies 117

1. General Principle of Reparation 118

2. Non-pecuniary Remedies 119

3. Compensation for Expropriation: Lawful vs. Unlawful Distinction 121

4. Compensation for Violation of Non-expropriation Protections in Investment Treaties 123

5. Valuation of Damages 124

a. Valuation Standards 124

b. Valuation Methods 124

6. Date of Valuation 128

7. Moral Damages 128

8. Punitive Damages 131

9. Interest 132

10. Currency of the Award 134

11. Arbitration Costs and Legal Representation Costs 135

12. Limitations on Compensation 137

a. Causality and Remoteness of Damages 137

b. Discretion and Award for Damages 138

D. Procedure, Enforcement, and Annulment 139

1. Burden/Standard of Proof 139

a. General Principle 139

b. Burden of Proof and Jurisdictional Matters 140

c. Burden of Proof and Nationality 140

d. Burden of Proof and Document Production 140

2. Challenges to Arbitrators 141

a. Challenges to Arbitrators and Repeat Appointments 141

b. Challenges to Arbitrators and Issue Conflicts 142

c. ICSID’s Manifest Lack of Qualities 144

d. Challenges to Arbitrator and Swiss Verein Structures of Law Firms 145

3. Provisional/Interim Measures 146

a. Provisional Measures and Statements to Media/Amicable Settlement 146

b. Provisional Measures and Security Issues 146

c. Provisional Measures and Advance Costs 147

d. Provisional Measures and the Detention of a Ship Vessel 147

4. Third-Party Funding 148


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xiv Detailed Table of Contents

5. Precedential Value of Earlier Decisions/Jurisprudence Constante 148

a. General Rule 148

b. Prior Cases and the MFN Debate 149

6. Annulment and Enforcement of Awards 150

a. Annulment Proceedings 150

b. Enforcement Proceedings 151

PART TWO—BRITISH INSTITUTE OF INTERNATIONAL AND COMPARATIVE LAW

Introduction 155

4. The Principle of Proportionality and the Problem of Indeterminacy in International Investment Treaties 157

Introduction 157

A. International Investment Treaties and the Problem of Indeterminacy 160

1. Standards and Rules and the Need for Constitutional Values 160

2. Standards and Rules in Investment Treaties and the Constitutional Deficit 163

B. The Problematic Principle of Proportionality 167

1. The Normative Content of Proportionality 172

2. The Consequentialist Assumption of the Commensurability of the State’s Interests and the Individual’s Rights 173

3. Open Questions about Weight and Decision-making Competence 175

4. Proportionality and Standards of Review 176

C. A Proportionality Case Study: The Constitutional Character of Proportionality in the European Court of Human Rights 178

D. Proportionality and Its Invocation and Use in Investor-State Arbitration 182

1. A Review of the Principal Awards 182

a. S.D. Myers and Pope & Talbot v. Canada 182

b. Tecmed and Its Progeny 185

c. Occidental Petroleum v. Ecuador 189

2. Summary: The Problems, Limitations, and Hazards of Transplanting the Principle of Proportionality into International Investment Law 192

E. Closing Considerations about the Persistent Problem of Indeterminacy and the Developing “New Normal” of Investment Treaty Arrangements 195

Conclusion 200


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Detailed Table of Contents xv

5. Proportionality, Reasonableness, and Standards of Review in Investment Treaty Arbitration 201

Introduction 201

A. Proportionality 202

1. The Merits of Proportionality 204

2. Against Proportionality 205

B. Reasonableness 208

1. The Merits of Reasonableness 211

2. Against Reasonableness 214

3. Reasonableness in Investment Treaty Arbitration 216

C. Standards of Review 220

D. Proportionality, Reasonableness, and the Standards of Review 225

Conclusions 227

6. Role of Investors’ Legitimate Expectations in Defense of Investment Treaty Claims 229

A. Sources of Legitimate Expectations 231

1. Rights and Corresponding Obligations under Domestic Law 231

2. Representations of the Host State 233

3. Forbearance by the Host State 235

4. Ultra Vires and Contra Legem Acts and Representations 236

B. Defenses Based on the Absence of Legitimate Expectations 240

1. Jurisdictional Defenses 240

2. Merits Defenses 241

a. Expropriation Claims 242

b. FET Claims 244

c. Umbrella Clause Claims 246

3. Defenses Regarding the Amount of Compensation 246

Conclusion 247

PART THREE—GENERAL ARTICLES

7. Balancing Investor Protection and Regulatory Freedom in International Investment Law: The Necessary, Complex, and Vital Search for State Purpose 251

Introduction 251

A. Likeness, Competition, and Motive Review: The Legal and Normative Case 255

B. Sensitivity and Scope: Distinguishing Regulatory Design vs. Application 276


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C. Operationalizing an Inquiry into State Purpose 281

1. “Subjective” and “Objective” Evidence of State Purpose 281

2. Text, Structure, and Effect of Measure 286

3. Legislative History 288

4. Timing: Ex Post Justification? 290

5. Domestic Court Rulings 292

6. External Justification 294

7. Multiple Purposes 300

Conclusion 302

8. Jurisprudential Interaction between ICSID Tribunals and the International Court of Justice 305

Introduction 305

A. The Status and the Value of ICSID and ICJ Precedents in ICSID Arbitration 307

1. The Legal Status of a Precedent 307

2. The Value of a Precedent 311

a. Relevance of a Precedent 311

b. The Quality of the Reasoning of a Precedent 313

c. Reputation of the Adjudicator 315

d. Which Weighs More? 317

B. Dynamics of the Jurisprudential Interaction between ICSID Tribunals and the ICJ 318

1. The Hierarchical Relationship 319

2. Degree of Reciprocal Engagement 321

3. The Function 324

a. Fulfilling the Mandate of Resolving a Dispute 324

b. Enhancing Persuasiveness, Authority, or Legitimacy of Individual Decisions 325

c. Cross-Fertilization 325

e. Contributing to the Coherent Development of General International Law 327

C. Grounds for the Jurisprudential Interaction 328

1. Normative Linkages 329

a. Norms Directly Establishing the Relationship between Two Courts or Tribunals 329

b. The Same Applicable Law 331

c. Multi-Sourced Equivalent Norms 332

2. Institutional Linkages 334

Conclusion 335

9. The Migration of Constitutional Ideas: The Strange Case of Proportionality in International Investment Law and Arbitration 337

Introduction 337


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Detailed Table of Contents xvii

A. The Migration of Constitutional Ideas 340

B. Proportionality: A Cosmopolitan Destiny? 346

C. Proportionality in International Investment Arbitration 349

D. Critical Assessment 353

E. Theories and Methods of Comparative Constitutional Law: Function vs. Culture? 356

Conclusions 359

10. Inconsistency in Investor-State Awards and the Role of State Interpretations: The Example of the Mexican Sweetener Trio of Cases under NAFTA 361

Introduction 361

A. Background on Non-disputing Party Submissions and on the Sweetener Cases 366

1. Article 1128 Submissions Process 366

a. Arguments and Holdings Related to Article 1128 367

b. Issues and Challenges Related to Article 1128 Submissions 370

2. Facts and Legal Context 372

a. The NAFTA, Sugar, and HFCS in the mid-1990s 373

b. The Mexican Sugar Crisis, Resulting Protective Measures, and Challenge 374

B. Relationship between NAFTA’s Investment and Trade Obligations: A Question of Jurisdiction or Damages Evaluation? 376

1. Context and State Parties’ Prior Submissions 376

2. Sweetener Tribunals’ Holdings 378

a. Inconsistent Holdings: ADM v. Cargill 379

b. Court Decisions Rejecting Set-Aside of the Cargill Award 382

3. Two Outcomes, Divergent Approaches, and Key Question 384

C. Relationship between IIAs and International Customary Law on Countermeasures: A Debate on the Nature of Investors’ Rights 386

1. Context and State Parties’ Prior Submissions 386

2. Sweetener Tribunals Holdings 389

a. ADM and the “Intermediate Theory” of Investor Rights 390

b. CPI and the Direct and Substantive Theory of Rights 392

c. Cargill—A Variation on the Direct Theory of Rights 394

3. One Outcome, Two Models, and Many Disagreements 395

Conclusion 398


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xviii Detailed Table of Contents

11. States Strike Back—Old and New Ways for Host States to Defend against Investment Arbitrations 401

A. Jurisdiction and Admissibility 402

1. Definition and Legality of the Investment 403

2. Corruption 405

3. Hurdles at the Jurisdictional Stage 406

a. Fork-in-the-Road Clauses 406

b. Waiver Clauses 407

c. Local Remedies Clauses 408

d. Waiting Clauses 409

e. Procedural Trends 410

4. Most-Favored Nation Clauses and Procedural or Jurisdictional Requirements 410

5. Pre-Jurisdictional Phase Summary Dismissal of Cases 411

6. Conclusion on Jurisdiction and Admissibility 412

B. Merits 413

1. Right to Regulate 413

2. Delineating the Scope of Substantive Provisions 415

C. Post-Award Phase/Enforcement 418

1. Fundamental Use of the Annulment Process or Set-Aside Proceedings 418

2. Non-payment of Arbitral Awards 420

3. Initiation of State-to-State Dispute Settlement 421

D. Other Defenses 422

1. Anti-suit Injunctions and Interference by Host State Courts and Authorities 423

2. Counterclaims 424

3. Delay 426

4. Political Pressure 426

E. Influence of States on the System: Changing the Rules of the Game 427

1. Denunciation of ICSID Convention and Termination of BITs 427

2. Treaty Renegotiation and Revision of Model Treaties 428

3. Discontinuing Investor-State Dispute Settlement 430

4. Influence on the ICSID Mechanism 430

5. Adoption of National Legislation Hostile to Investment Protection 432

6. Introducing Investor Obligations, Including CSR 433

7. Professionalization of Defenses/Financing of Arbitration Claims 434

Conclusion 435


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Detailed Table of Contents xix

12. Revisiting the Countermeasures Defense in Investor-State Disputes: Approach and Analogies 437

Introduction 437

A. Countermeasures and Third Parties under the ILC’s Articles on State Responsibility 440

B. Contemporary Conceptions of Investors’ Rights 443

1. Case Law 444

2. Implications for Enforcement of International Obligations 447

3. Analysis and Alternative Approach 448

C. Policy Implications of a “Qualified Rights” Approach 452

1. “Depoliticization” of Investment Disputes 452

2. Continuing Significance of Investors’ Substantive Rights 454

D. Comparative Contract Law 455

E. International Human Rights Law 460

1. Investors’ Rights and Fundamental Human Rights 461

2. Investment Protection Obligations and Human Rights Obligation 462

F. Jurisdictional Limits of Investor-State Tribunals 465

Conclusion 471

13. The Political Economy of Crises and the International Law of Necessity after the Great Recession 473

A. Some Aspects of the Political Economy of Economic Crises in the Aftermath of the Great Recession 474

1. Economic Crises and Political Fragmentation 474

2. The Different Phases in the Unfolding of Economic Crises 475

a. Crisis Prevention or Crisis Denial 476

b. Crisis Containment: “Calamity When It Comes, It Comes in a Rush” (Philip Roth, The Plot Against America) 476

c. Crisis Management/Resolution 478

d. Prevention of the Next Crisis 481

3. Other Political Dimensions of the Great Recession 482

a. Efficiency vs. Transparency in the Resolution of Economic Crises 482

b. Inter-Agency Criticism, Admission of Errors, and Unilateral Declarations Admitting Contributions to Crises 484

B. The Political Economy of Crises and Its Impact on the Interpretation of BIT Non-precluded Measures Clauses and the Customary Rule of Necessity 486

1. The Politics of the Great Recession and Its Impact on the Requirement of Lack of State Contribution to Crises in BITs and in Customary International Law 488

a. Political Gridlocks and State Contribution after the Great Recession 491


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b. Regulatory Forbearance and State Contribution 493

c. Unilateral Declarations, Admissions of Errors, Inter-Agency Criticisms, and State Contribution to the State of Necessity 494

i. Unilateral Declarations Tacitly or Explicitly Admitting the Contribution 494

ii. Admission of Errors and State Contribution 497

iii. Inter-Agency Criticism and State Contributions 497

d. Contribution to the State of Necessity in Protracted Crises 498

2. The Political Economy of the Great Recession and the Requirement of Uniqueness of the Measures under the Customary Rule of Necessity 499

a. The Kind of Competent Authority as a Criterion to Determine the Existence of Alternative Means 500

b. Alternative Measures during the Containment Phase 502

c. Protracted Crises and the Temporal Dynamic of the Relevance of the Uniqueness Requirement 502

3. Prevention of the Next Crisis and Non-precluded Measures Clauses and the Customary Rule of Necessity 503

Conclusions 503

14. Minilateral Treaty-Making: International Investment Law 507

Introduction 507

A. Assessing Multilateralism in IIL 508

1. The Lack of a Broad Multilateral Framework 508

2. Overview of the Existing IIA Network 511

3. Multilateral Dimensions of the Existing System 514

4. The Shifting Global Economic Landscape 516

B. Minilateral Approaches to IIL 518

1. Minilateralism in IIL 518

2. Progressive Treaty Provisions 521

3. Potential to Reduce Atomization 524

Conclusion 527

15. Do Investment Promotion Agencies Promote Bilateral Investment Treaties? 529

A. A Brief Introduction to BITs 530

B. A Brief Introduction to IPAs 532

C. Research Question and Design 534

D. Results 536

Concluding Thoughts 541


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Detailed Table of Contents xxi

16. The Trend toward Open Contracting: Applicability and Implications for International Investment Agreements 553

Introduction 553

A. What Is Open Contracting? 554

B. Emerging Practices of Open Contracting at Different Stages of the Contracting Cycle 555

C. Government Motivations for Open Contracting in Investment Contracts 560

D. What Has Been the Private Sector Response? 562

E. Challenges to Effectiveness 564

F. How Might Open Contracting Practices Affect Future Investments? 567

17. New Regulations on Foreign Acquisitions of Land in Brazil and Argentina 569

Introduction 569

A. Limiting Foreign Large-Scale Acquisitions of Land in Argentina and Brazil: Addressing Growing International Concerns 572

1. The Place of Latin America in the Global Land Rush 572

a. Foreign Investors’ Interest in Latin America’s Land 572

b. The Presence of Foreign and Local Investors: A Diversity of Profiles 574

c. Is There “Land Grabbing” in Latin America? 576

2. International Policy Framework to Guide Foreign Land Investments 577

a. The Policy Context for Land Investments: National Policies for Foreign Access to Land 577

b. International Policy and Legal Elements on Land 578

c. Policy Responses to the Global Land Rush: The Guidelines on Large-Scale Investments in Farmland 579

B. Identified Reasons for Regulating Foreign Acquisitions of Land in Brazil and Argentina 581

1. The Growing Concern over Foreign Ownership of Land in Eastern Latin America 581

a. Concentration of Land Ownership and Agricultural Value Chains 581

b. Increasing Foreign Ownership of Land or Increasing Presence of Foreigners: Two Distinct Questions 583

2. Additional Reasons Motivating the Limitations of Foreign Ownership of Land 586

a. The Official Rationale Underlying the Regulation of Foreign Acquisition of Land in Brazil and Argentina 586


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b. The Sovereignty over Natural Resources and Food Security as a Backdrop for the Regulations 588

i. Sovereignty over Land and Water 588

ii. The Food Security Issue 592

C. New Regulations on Foreign Acquisition of Land in Brazil and Argentina 593

1. Evolution of the Regulatory Framework for Foreign Acquisition of Land in Brazil 593

a. 1964–1995: Stringent Limits on Foreign Acquisition of Land 594

b. 1995–2010: Liberalization of Foreign Acquisition of Lands 596

c. The 2010 New Legal Opinion and Its Impact on Foreign Acquisition of Land 598

2. Argentina’s Law to Limit Foreign Acquisition of Land 600

a. Structure and Character of the Law 600

b. The Four-Stage Limitation on Foreign Ownership of Land 600

c. Territorial Scope of Application 602

d. Qualifications to be a Foreigner 603

e. Creation of the National Register on Rural Lands and of the Inter-Ministerial Council on Rural Lands 605

f. Effect of the Law 606

D. Assessing the Impact of the New Regulatory Framework on Foreign Purchases of Land 606

1. Impact of the New Regulatory Framework on Foreign Purchases of Rural Land 607

2. Effectiveness of the New Regulations for Solving Foreigner-Related Problems 608

3. Possibilities for Investors to Circumvent the Limitations 611

a. The Multiple Flaws of the Brazilian Regulation 611

i. Corporate Structures Contemplated by the Current Regulatory Framework in Brazil 611

ii. Examples of Circumventing Schemes in Brazil 612

b. Possibilities to Circumvent the Law in Argentina 613

4. Likelihood of a New Law or Decree in Brazil 616

Conclusion 617


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PART FOUR—SPECIAL SECTION: WINNING MEMORIALS FROM THE 2013 FOREIGN DIRECT INVESTMENT INTERNATIONAL MOOT COMPETITION (FDI MOOT)

18. Winning Claimant Memorial: National Law University, Delhi 621

19. Winning Respondent Memorial: University of Buenos Aires 655


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SUBMISSION POLICY

The Investment Yearbook is an annual publication published by Oxford University Press in association with the Columbia Center on Sustainable Investment. It draws on the guidance of a distinguished Advisory Board, ongoing engagement by an Editorial Committee consisting of leading academics in the field of investment law and policy,

and on skillful work by an Editorial Staff of students from Columbia Law School and McGill University Faculty of Law.

The Investment Yearbook addresses legal and policy issues in the area of international investment—from national, regional, and international perspectives. The Editorial Committee invites for publication manuscripts that are of outstanding quality in terms of academic rigor, quality of the argument, originality, and contribution to the field of international investment law and policy. The Investment Yearbook will not consider a manuscript that has been published pre-viously. Every manuscript that is considered for publication will be assessed through an external double-blind peer-review process. The style of the manuscripts should be in accordance with the OSCOLA Guidelines, as adapted to the Yearbook (available from the Editorial Committee).

The Editorial Committee welcomes the submission of manuscripts to the Investment Yearbook. Manuscripts should be electronically sent to the Columbia Center on Sustainable Investment, the Editor, Prof. Andrea Bjorklund, or any member of the Editorial Committee.

Columbia Center on Sustainable Investment (CCSI): [email protected] K. Bjorklund, Editor of the Investment [email protected] Committee:N. Jansen Calamita: [email protected] Cohen Smutny: [email protected] Johnson: [email protected] Muchlinski: [email protected] Onwuamaegbu: [email protected] Ortino: [email protected] Sachs: [email protected]


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CONTRIBUTORS

Alberto Alvarez-Jimenez is a Colombian and Canadian national who lives and works in New Zealand. He holds a Doctor of Laws degree from the University of Ottawa law faculty, and an LL.M. from McGill University. Currently, he is a senior lecturer at the Faculty of Law of the University of Waikato and also an international consultant on international law. Professor Alvarez-Jimenez’s research agenda concentrates on public international law, interna-tional trade law, and foreign investment law. He has published more than 25 articles in promi-nent peer-reviewed journals in the United States, Germany, the United Kingdom, Canada, the Netherlands, and Switzerland. In addition, he has presented papers at academic events in North America, Latin America, Europe, and Oceania. His publications on international investment law have appeared in a previous volume of this Yearbook, in the American Review of International Arbitration, the Journal of World Investment and Trade, and the Journal of International Arbitration. The chapter included in this volume is the second part of a project dealing with the impact of the current economic crisis on international investment law. The first, titled “The Great Recession and the New Frontiers of International Investment Law: the Economics of Early Warning Models and the Law of Necessity,” was published in the Journal of International Economic Law (Vol. 17 No. 3, 517–550). Professor Alvarez-Jimenez can be reached at [email protected].

Dr. Claudia Annacker is a partner based in the Paris office of Cleary Gottlieb Steen & Hamilton LLP. Her practice focuses on international litigation and arbitration and public international law matters, including investor-state disputes, disputes involving international organizations, state succession issues, and state immunity, as well as disputes before the European Court of Human Rights. Her current work includes representing the Hellenic Republic, the French Republic, the Arab Republic of Egypt, Russia, and DP World in invest-ment treaty arbitrations and the Republic of Iraq in an interstate arbitration against the Republic of Turkey. Dr. Annacker is a visiting professor at the Paris West University Nanterre and an adjunct professor at the University of Vienna. She is widely published on various aspects of public international law and European law and has also served as an arbitrator in interna-tional arbitrations.


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Preeti Bhagnani (at the time of writing: LL.M. candidate, Columbia Law School) is an Associate in the International Arbitration Group at White & Case LLP. Ms. Bhagnani has served as counsel to sovereign and corporate entities in international commercial arbitrations and international investment disputes. She was formerly a Legal Counsel at Shell and a Senior Associate at Rajah & Tann LLP. She holds an LL.B. from the London School of Economics and Political Science and an LL.M. from Columbia Law School where she was a Kent Scholar and recipient of the Edwin Parker Prize for International or Comparative Law. She is admitted to the bar in Singapore and New York.

Nicholas J. Birch is an Associate at the Law Offices of Stewart and Stewart in Washington, D.C., and a J.D./M.B.A graduate from Georgetown University. Mr. Birch has practiced in trade remedies and international investment law and arbitration. He has also been involved in research and writing on international investment, arbitration, and trade law and development, and has been featured in multiple books and articles.

N. Jansen Calamita, Juris Doctor summa cum laude (Boston); Bachelor of Civil Law (Oxford). Mr. Calamita is Senior Research Fellow and Director of the Investment Treaty Forum at the British Institute of International and Comparative Law. He concurrently holds the position of lecturer in the University of Birmingham Law School. Mr. Calamita has served in the Office of the Legal Adviser in the U.S Department of State and in the UNCITRAL Secretariat. He con-tinues to counsel governments on matters relating to the law of foreign investment and inter-national dispute resolution. His research is in general public international law and the international law of investment.

Joanna Coyne is an associate in the International Dispute Resolution and Commercial Litigation groups in the Washington D.C. office of Crowell Moring LLP. In her practice, Joanna represents clients in a wide-range of complex litigation and arbitration matters, with a special focus on international disputes. Joanna has represented corporations and individuals in indus-tries, including mining, tourism, construction, healthcare, and education in disputes before U.S. courts, administrative bodies, and international tribunals. Joanna is also an active par-ticipant in the firm’s pro bono program and has focused on defending political asylum seekers, families in child custody disputes, and low-income tenants in eviction proceedings.

Martin Delaroche is a Ph.D. student in Public Policy, a Fulbright scholar, and a research assistant at the School of Public and Environmental Affairs (SPEA), the Department of Political Science, and the Ostrom Workshop at Indiana University, Bloomington. He is also a doctoral student in Geography at the Institut des Hautes Etudes de L’Amérique Latine (IHEAL) of the University Paris 3 Sorbonne-Nouvelle, France. His research focuses primarily on land property rights, large-scale land investments, and environmental degradation in Latin America. He holds master degrees in International Economic Law (University of Paris 1 Panthéon-Sorbonne, in partnership with Columbia Law School and Sciences Po Paris) and in Applied Economics (University of Paris 1).

Kabir Duggal is a senior associate in the International Arbitration group of Baker and McKenzie’s New York office. His practice focuses on investor-state arbitration, commercial arbitration, and issues and disputes relating to public international law. Mr. Duggal is also a Lecturer-in-Law at the Columbia Law School, co-teaching “International Investment Arbitration.” He serves as the head of the advisory team on matters relating to procedure on


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Contributors xxix

Investmentclaims.com (Oxford University Press). He also serves on ICSID Review’s Peer Review Board and is a Fellow at the Columbia Center on Sustainable Investment. Mr. Duggal is a graduate of the University of Mumbai (University Medal), University of Oxford (DHL-Times of India Scholar), and NYU School of Law (Hauser Global Scholar). He is admitted to practice law in India, England and Wales, and New York.

Michael V. Gestrin is currently a senior economist in the Investment Division of the Organisation for Economic Co-operation and Development in Paris, France. Previously he has held research and teaching positions at the University of Oxford, ESSEC Business School, the University of Toronto, and the United Nations Conference on Trade and Development (UNCTAD). Dr. Gestrin’s main areas of research include the impact of global value chains on the organization of multinational enterprises, the globalization of state-owned enterprises, and global trends in foreign direct investment. He has a doctorate from the University of Oxford, where he examined the profitability of the international operations of multinational enterprises.

Michael Jarvis, Senior Private Sector Development Specialist with the World Bank, specializes in good governance, private sector roles in development, and multi-stakeholder approaches. Mr. Jarvis leads programming on good governance of extractive industries, including a focus on issues of contract disclosure. Building on this work, he has overseen development of a new global initiative on open contracting to promote better outcomes from the estimated US$ 9.5 trillion in public-private contracts globally. Mr. Jarvis previously worked on industry codes of conduct and as a consultant on historical corporate responsibility issues. Mr. Jarvis has advanced degrees from the University of Cambridge and Johns Hopkins University. He is a frequent author and blogger.

Lise Johnson is the Investment Law and Policy Head at the Columbia Center on Sustainable Investment (CCSI). Her work at CCSI centers on analyzing investment treaties, treaty-based investor-state arbitrations, and examining the implications those instruments and cases have for host countries’ domestic policies and sustainable development strategies. In addition, she concentrates on key institutional and procedural aspects of the investment law framework, including efforts to increase transparency in and legitimacy of investor-state dispute settle-ment. She has a B.A. from Yale University, J.D. from University of Arizona and LL.M. from Columbia Law School, and is admitted to the bar in California.

Jürgen Kurtz is an Associate Professor and Director of Studies of the International Economic Law Program at the University of Melbourne, Australia. He researches and teaches in the var-ious strands of international economic law including the jurisprudence of the World Trade Organization and that of investor-state arbitral tribunals. Mr. Kurtz has advised the govern-ments of a number of OECD and developing countries and served as a consultant to leading regional and multilateral agencies involved in trade, investment, and development. He cur-rently serves on the editorial board of the Journal of World Investment and Trade.

Ian A. Laird is Co-Chair of the International Dispute Resolution Group in the Washington, D.C., office of Crowell & Moring LLP. Over the past 16 years, he has represented a range of clients in international arbitration proceedings involving disputes between corporations and foreign governments. He is an adjunct professor at Columbia Law School and Georgetown University Law Center. Mr. Laird is the Co-Director of the International Investment Law


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xxx Contributors

Center (International Law Institute), Co-editor of the series, Investment Treaty Arbitration, and International Law (Juris Publishing – now in its eighth edition), and Editor-in-Chief of InvestmentClaims.com (Oxford University Press).

Céline Lévesque is Full Professor and Dean of the Civil Law Section at the University of Ottawa. Her primary area of research is International Investment Law. Dean Lévesque has written extensively on NAFTA Chapter 11 (Investment) and on the Canadian Foreign Promotion and Protection Agreement (FIPA) program. In 2008–2009, she was a Scholar-in-Residence at the Trade Law Bureau of the Canadian Department of Foreign Affairs and International Trade. In that capacity, she contributed to the defense of NAFTA Chapter 11 claims and to bilateral investment treaty negotiations. Prior to joining the University, Dean Lévesque worked at the World Bank in Washington, D.C. (1995–1998). She holds an LL.L. (Ottawa), LL.B. (Dalhousie), LL.M. (College of Europe), and M.A. (George Washington).

Maninder Malli is a Canadian lawyer with diverse experience in international investment, corporate transactions, and development finance. He currently manages global regulatory compliance for a multinational technology company. Mr. Malli previously held positions with the United Nations Department of Political Affairs in New York and the World Bank (Legal Vice Presidency) in Washington D.C., and practiced law with the Canadian firm Blake, Cassels & Graydon. Mr. Malli holds a master’s degree in International Law from New York University, a law degree from Queen’s University, and a bachelor’s degree from the University of British Columbia.

Lindsey Marchessault is a Canadian lawyer and a consultant with the World Bank Governance Global Practice. Ms. Marchessault has contributed to the launch of the Open Contracting Partnership and the development of the Open Contracting Global Principles and Data Standard. In her work, she engages with governments and other stakeholders to develop and implement strategies for improved transparency and collaboration for better project outcomes. Previously, Ms. Marchessault worked at the International Centre for Settlement of Investment Disputes.

Lars Markert is an associated partner in the international dispute resolution department of Gleiss Lutz’s Stuttgart office. He is admitted to the German and New York bars and frequently advises Western and Asian clients in international commercial and investor-state arbitrations under most of the major arbitration rules, spanning industries such as pharmaceutical, avia-tion, commercial, and energy. He is on the Panel of Arbitrators of the Korean Commercial Arbitration Board (KCAB), on the Global Advisory Board for the ICDR Y&I, an academic adviser to the International Investment Law Centre Cologne (IILCC), and regularly teaches, speaks, and publishes on issues of international commercial and investment arbitration.

Dr. Borzu Sabahi is an attorney in the International Arbitration group of Curtis, Mallet- Prevost Colt & Mosle LLP. He represents governments and state-owned entities in complex international arbitration matters. He was recognized by the Who’s Who of International Commercial Arbitration Lawyers 2015 as a leading practitioner. He is also an adjunct professor at Georgetown and Columbia Law Schools, Co-Director of ILI International Investment Law Center, Editor of Oxford’s InvestmentClaims.com, and Co-Chair of Annual Juris Conference in Washington, D.C. His publications have been cited by arbitral tribunals and the U.S. Supreme Court. He is licensed to practice in New York and the District of Columbia.


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Contributors xxxi

Lisa Sachs is the Director of the Columbia Center on Sustainable Investment. Since joining CCSI in 2008, she established and now oversees the three areas of focus for CCSI: investments in extractive industries, investments in land and agriculture, and investment law and policy. She specializes in extractive industries, foreign investment, corporate responsibility, and inte-grated economic development. She received a B.A. in Economics from Harvard University, and earned her J.D. and an M.A. in International Affairs from Columbia University, where she was a James Kent Scholar and recipient of the Parker School Certificate in International and Comparative Law.

Frédéric G. Sourgens is an Associate Professor of Law at Washburn University School of Law. He publishes regularly on political risk, transnational commercial law, and the theory of trans-national law. His most recent book is A Nascent Common Law: The Process of Decisionmaking in International Legal Disputes Between States and Foreign Investors (Brill | Nijhoff, 2015). Mr. Sourgens serves as Managing Editor for Oxford University Press’ “Investment Claims” reporter, as well as Co-editor of the series, Investment Treaty Arbitration and International Law (Juris Publishing – now in its eighth edition).

Catharine Titi is a postdoctoral research fellow at the University Panthéon-Assas Paris II. She holds a Ph.D. in Law from the University of Siegen, Germany, and has completed earlier studies in Greece, France, and the United Kingdom. Ms. Titi also holds a postgraduate quali-fication from the Courtauld Institute of Art, London, and has previously worked in manage-ment consulting for PwC, UK. She has regularly taught international economic law and international investment law and has published in a variety of academic journals. Her mono-graph on The Right to Regulate in International Investment Law was published in 2014 by Nomos and Hart Publishing.

Dr. Valentina Vadi is Professor of International Economic Law at Lancaster University, United Kingdom. Dr. Vadi also lectured at Hasselt University (Belgium), the University of Rome III (Italy), the China EU School of Law (P.R. China), and Maastricht University (The Netherlands). She has published more than 70 articles in various areas of public interna-tional law in top journals, including the Vanderbilt Journal of Transnational Law, the Stanford Journal of International Law, the Columbia Human Rights Review, the European Journal of International Law, the Journal of International Economic Law, and others. She is the Co-editor (with Hildegard Schneider) of Art, Cultural Heritage and the Market: Legal and Ethical Issues (Springer: Heidelberg 2014), and (with Bruno De Witte) of Culture and International Economic Law (Routledge: 2015). Dr. Vadi is the author of Public Health in International Investment Law and Arbitration (Routledge, Abingdon 2012) and Cultural Heritage in International Investment law and Arbitration (Cambridge University Press, 2014).

Louis T. Wells is the Herbert F. Johnson Professor of International Management, Emeritus, at the Harvard Business School. Professor Wells has published books or articles on joint ven-tures, mining negotiations, foreign investment policy, investment promotion, and arbitration of disputes between foreign investors and host governments. Professor Wells has served as consultant to the governments of a large number of countries and as an expert in investor-state arbitrations. He is a Fellow of the Academy for International Business and a member of the Council on Foreign Relations. He received a B.S. in Physics from Georgia Tech and an M.B.A. and a D.B.A. from Harvard University.


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xxxii Contributors

Jason Yackee is an associate professor at the University of Wisconsin Law School. Professor Yackee’s research centers on international investment law and administrative law. He teaches Contracts, International Arbitration, and International Business Transactions. Professor Yackee graduated summa cum laude and Phi Beta Kappa from the University of Pittsburgh, earned an M.A. and Ph.D. in Political Science (International Relations) from the University of North Carolina at Chapel Hill, and earned a J.D., summa cum laude and Order of the Coif, from Duke University School of Law where he was an editor for the Duke Law Journal. He has also studied French and European law at L’Université Panthéon-Assas (Paris-2). Professor Yackee has published articles in a variety of peer-reviewed social sci-ence journals, student-edited law reviews, and edited volumes, and he has served as Co-Chair of the American Society for International Law’s (ASIL) International Economic Law Interest Group.

Jure Zrilič is a Ph.D. Candidate in Law at the University of Cambridge, focusing on interna-tional investment law. In 2012 he worked as a White & Case Fellow at the School of International Arbitration at Queen Mary, University of London, where he conducted research for the International Arbitration Survey and supervised LL.M. students. His practical experience includes working at a The Hague–based NGO in the justice sector, and completing a clerkship at the High Court in Slovenia.


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