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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 263  October 21, 2019
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Alexa Busser ([log in to unmask])
*Strengthening multi-stakeholder cooperation in the international
investment regime: The Brazilian model*
* <#m_201303598757831137__edn1>
Fabio Morosini, Nicolás M. Perrone and Michelle R. Sanchez-Badin**

There is an increasing understanding that investment promotion and
protection should not be an end in itself, but should be a means to
advancing the Sustainable Development Goals (SDGs). The question is how the
international investment regime can better serve this ultimate purpose.
First, there is no clear evidence of a robust relationship between
international investment agreements and FDI and, also, that these treaties
help to promote sustainable FDI. Second, investor-state dispute settlement
(ISDS) has been described as reducing host countries’ regulatory powers and
producing regulatory chill.

The current reform agenda focuses on investor protection and ISDS only.
Various proposals have been made, including the creation of a permanent
investment court.[1] <#m_201303598757831137__edn3> While some of these
changes could improve the regime, marginally at least, meaningful reform
requires taking a holistic approach to the relationship between FDI and the
SDGs. It should deal with the benefits, costs and risks of all parties
involved, i.e., not only foreign investors and states but also local
communities and indigenous peoples. Also, it should strike a better balance
between cooperation, the rule of law and dispute avoidance and settlement.
[2] <#m_201303598757831137__edn4>

Despite its imperfections, Brazil’s approach with the investment
cooperation and facilitation treaties suggests institutional reforms based
on strengthened cooperation.[3] <#m_201303598757831137__edn5> At least two
features of Brazil’s treaties use cooperation to promote FDI: investment
facilitation through state–state cooperation and dispute resolution.

Brazil’s agreements aim to facilitate investment by enhancing cooperation
through the creation of an institutional framework to promote cooperation
amongst all the state parties involved, including through the crafting of
thematic agendas. The objective is not only to increase FDI flows, but also
to define the type of investment that the parties want to facilitate and
the conditions that will govern the investment projects. The private sector
is meant to be part of this process, promoting a private-public dialogue.
The definition of “private sector,” moreover, could be interpreted broadly;
arguably such dialogues should include not only foreign investors and host
countries but also civil society, local communities and indigenous peoples.

The thematic agendas are a key policy tool of Brazil’s investment
agreements. They are a product of bilateral negotiations between the state
parties and respond to their domestic demands. The content of these agendas
remains subject to recurrent negotiations, allowing governments to tailor
their priorities and balance the benefits, costs and risks of foreign
investment. The parties are encouraged to expand or detail the thematic
agendas, by negotiating special commitments, additional schedules and other
supplementary agreements. Also, the thematic agendas could help developing
countries put forward concerns related to domestic spillovers and linkages,
technology transfer, capacity building, and other development-oriented

In line with the importance of cooperation, Brazil’s agreements provide
mechanisms for risk mitigation and dispute prevention. They comprise
diplomatic and cooperative mechanisms for implementing, overseeing and
enforcing treaty obligations. The agreements create two types of
institutions for this task: the Joint Committee and the Focal Points (or
ombudspersons). The Joint Committee operates at the inter-state level and
is composed of government representatives from both parties. This Committee
is expected to meet at least annually. The Focal Points operate at the
intra-state level, to provide government assistance to investors from the
other party on a regular basis. Each party to the agreement must create or
designate an existing governmental body, within their jurisdiction, to
serve as Focal Point for investors.

Furthermore, Brazil’s agreements discourage adversarial litigation. The
Joint Committee and the Focal Point not only promote the regular exchange
of information and prevent disputes but, if a dispute arises, they provide
support to manage the dispute-settlement process through consultations,
negotiations and mediation. These mechanisms function as dispute prevention
mechanisms and seek to reduce the number of investor claims against host
countries. For example, besides monitoring and discussing the
implementation of the related agreement, the Joint Committee works as a
mechanism to facilitate the settlement of investment disputes between the
parties. Taking matters to the Joint Committee is a mandatory step before
the parties are able to reach for state-to-state arbitration. The
agreements do not provide for investor-state arbitration.

The rule of law and dispute avoidance and settlement may not be enough to
turn FDI into a means to the realization of the SDGs. Multi-stake dialogue
and cooperation should also be a central aspect of any institutional
design. In this regard, the Brazilian model, at least in theory, scores
better than most existing treaties and reform proposals.

* <#m_201303598757831137__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_201303598757831137__ednref2> Fabio Morosini ([log in to unmask]),
Nicolás M. Perrone ([log in to unmask]) and Michelle Ratton Sanchez
Badin ([log in to unmask]) are, respectively, Associate Professor of
International Law at Universidade Federal do Rio Grande do Sul
(Brazil),Visiting Professor at Universidad Nacional de San Martín
(Argentina) and Professor at São Paulo Law School of Fundação Getulio
Vargas (Brazil). The authors are grateful to Cesar Augusto Vermiglio
Bonamigo, Martin Dietrich Brauch and Katia Fach for their helpful peer
[1] <#m_201303598757831137__ednref3> Stephan Schill and Geraldo Vidigal,
“Investment dispute settlement à la carte within a multilateral
institution: A path forward for the UNCITRAL process?,” *Columbia FDI
Perspectives*, No. 248, March 25, 2019.
[2] <#m_201303598757831137__ednref4> Nicolás M. Perrone, “The governance of
foreign investment at a crossroad: is an overlapping consensus the way
forward?,” *Global Jurist*, vol. 15 (2015), pp. 1-28.
[3] <#m_201303598757831137__ednref5> Michelle Sanchez Badin and Fabio
Morosini, “Navigating between resistance and conformity with the global
investment regime: The new Brazilian agreements on cooperation and
facilitation of investment”, in Fabio Morosini and Michelle Sanchez Badin,
eds.,* Reconceptualizing International Investment Law from the Global South
*(Cambridge: Cambridge University Press, 2017), pp. 188-217.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Fabio Morosini, Nicolás M. Perrone and Michelle
R. Sanchez-Badin**, ‘**Strengthening multi-stakeholder cooperation in the
international investment regime: The Brazilian model,**’ Columbia FDI
Perspectives, No. 263, October 21, 2019. Reprinted with permission from the
Columbia Center on Sustainable **Investment (***
A copy should kindly be sent to the Columbia Center on Sustainable
Investment at **[log in to unmask]* <[log in to unmask]>*.*

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Alexa Busser, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 262, Rishi Gulati and Nikos Lavranos, ‘Guaranteeing the
   independence of the judges of a Multilateral Investment Court: A must for
   building the Court’s credibility,’ October 7, 2019
   - No. 261, Zbigniew Zimny, ‘FDI has benefitted the EU members from
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   - No. 260, Karl P. Sauvant, ‘Do not neglect establishment trade: the
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*All previous FDI Perspectives are available at *
*. *

*Other relevant CCSI news and announcements*

   - CCSI released its 2018-2019 Annual Report
   - *On October 24, 2019*, our Fall 2019 International Investment Law and
   Policy Speaker Series, co-sponsored by Baker McKenzie and Arnold &
   Porter, continues with a talk by *Grant Hanessian*, Partner, Baker
   McKenzie, on "Legitimacy, Efficiency and ICSID’s Proposed Rule
Changes." *Please
   see our website
   more information and the full schedule*.
   - *On November 18, 2019*, CCSI, the Center for Chinese Legal Studies,
   and the Society for Chinese Law (SCL) will co-host a talk by *Angela
   Zhang*, Associate Professor of Law and Director of the Centre for
   Chinese Law, University of Hong Kong, on “The US-China Trade Negotiation: A
   Contract Theory Perspective.” *Please see our website
   for more information.*

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2019 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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*Karl P. Sauvant, PhD*

*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
| p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask]
| w: | t: @CCSI_Columbia

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