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What Our Practitioners Are Saying

Spring 2008
International Disputes Quarterly

Ank Santens, New York, on Changes in the Law Relating to Investment Disputes in the Americas
On February 29, 2008, Ank Santens, Partner, New York, participated in a panel discussion on Energy and Natural Resources Disputes in the Americas, at the First Conference of the Americas organized by the International Bar Association and held in Mexico City. Ms. Santens discussed recent changes in the law relating to investment disputes in the Americas, including the 2004 United States Model Bilateral Investment Treaty ("BIT"); the 2003 Canadian Model Foreign Investment Protection Agreement ("FIPA") (the Canadian equivalent of a BIT); and the 2004 Dominican Republic – Central America – United States Free Trade Agreement ("CAFTA – DR").

In respect of the model BIT and FIPA, Ms. Santens noted that, in the last decade, Canada and particularly the U.S. had shifted from being champions of investment protections for their nationals investing abroad, to a more cautious approach due to the States having been sued by foreign investors on several occasions. Given the recent experience of both the U.S. and Canada as respondents in international arbitrations, both the new model BIT and the new model FIPA are more protective of the States than the previous generation of BITs and FIPAs.

Ms. Santens explained the three objectives that can be found in the BIT/FIPA models, which were drafted around the same time and are very similar. First, the models attempt to clarify substantive obligations and protections by including more detail than previous versions and by clearly spelling out what the treaty does and does not do. Second, the models attempt to make the dispute resolution process more regulated and therefore, it is hoped, more efficient. For example, each model has very detailed provisions on the selection of arbitrators and the conduct of arbitration. Third, the models aim to be more transparent than earlier versions. The States are required to publish or otherwise make publicly available any laws, regulations, procedures and administrative rulings of general application respecting any matter covered by the treaty. To the extent possible, each State also promises to publish in advance any such measure that it plans to adopt and to provide interested persons and the other State with a reasonable opportunity to comment on such proposed measures. In respect of investor-state dispute resolutions, hearings are to be open to the public, there is provision for amicus curiae submissions, and, in the U.S. model BIT, all documents surrounding the arbitration are to be published (in the Canadian model, the disputing party may object to publication of any document except the award).

Ms. Santens noted that post 2003/2004, all U.S. BITs and investment chapters in the US-concluded Free Trade Agreements and all Canadian FIPAs have been very similar to these models, although, to her knowledge, there have been no cases at this point which have been based on such agreements. The practical effect of the models therefore remains to be seen. One big question is whether the abundance of detail will help to avoid, or instead create, confusion and dispute. Ms. Santens expressed the view that, often, "less is more" in these types of documents. Another matter that is already being tested is how the new models influence interpretation of the older-generation investment treaties and vice versa (e.g., does the fact that a provision in the new model is not present in an older-generation treaty mean that the parties intended for it not to be there or should the new model instead "enlighten" the parties’ intent in the older-generation treaties?). It can be expected that these matters will be explored in numerous cases in the years to come.

Ms. Santens also discussed CAFTA – DR, which includes an investment chapter that is based on, and very similar to, the 2004 U.S. model BIT. Two cases under CAFTA – DR have been commenced but not yet resolved (one against Guatemala and one against the Dominican Republic). Ms. Santens concluded that the same considerations as those raised with respect to the model BIT and FIPA applied in this context.

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