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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Abigail Greene ([log in to unmask])

*The Columbia FDI Perspectives are a forum for public debate. The views
expressed by the authors do not reflect the opinions of CCSI or our
partners and supporters.*

No. 341   October 3, 2022
*Strengthening international negotiation assistance for developing host
Vanessa Tsang* <#m_-4065552014254728365__edn1>

It is in the interest of host countries, especially developing ones, to
ensure that the investment contracts they enter into with foreign investors
are fit-for-purpose and effectively protect the parties’ often competing
commercial interests. Given the scale, value and strategic importance of
these projects for developing countries (such as those in extractives and
infrastructure), these contracts have far-reaching implications for host
countries’ revenues and social and economic development for decades to
come. Similarly, firms invest billions of dollars in these projects and
make long-range financial commitments.

To ensure that these contracts are fair and equitable, a number of host
countries may need to rely on international negotiation support. This is
all the more important as investor-state dispute settlement (ISDS)
increases the risks that countries incur high legal fees and are ordered to
compensate investors if they allegedly or *de facto* deviate from
contractual terms or breach applicable international legal norms. These
costs can be significant: in 2017, for instance, the P&ID tribunal
awarded $6.6 billion (now worth $10 billion with interest) to Irish
businesspeople against Nigeria for a $20 million investment; and in 2019,
the *ConocoPhillips*
tribunal awarded $8.4 billion for the claimants against Venezuela.

When preparing investment contracts for large-scale projects, most MNEs
will have highly competent in-house and/or external counsel to represent
them in contract negotiations. There is, however, often an inherent
inequality of arms in negotiations: many developing countries typically do
not have large in-house staff with extensive experience in contract
negotiations with foreign investors and have limited budgets to hire
experienced advisors. The desired equality of arms and the stability of the
contractual regime are often under threat before negotiations have started
in earnest.

In such circumstances, international entities provide effective
solutions—ranging from pre-negotiation support to direct negotiation
assistance—to help redress any imbalance in the context of contract
negotiations and to support these countries in entering into the best
possible contracts:

   - *International Senior Lawyers Project (ISLP)*
   Founded in 2000, ISLP assists host developing countries manage extractive
   resources by procuring, *pro bono*, (mostly senior-level and retired)
   lawyers to advise on, or get directly involved in, negotiating investment
   - *African Legal Support Facility (ALSF)*
   Established in 2008 and hosted by the African Development Bank
   ALSF provides funding to African governments to retain top international
   legal experts from within its international network and to obtain technical
   assistance in negotiating complex commercial transactions in extractive
   industries and infrastructure.
   - *CONNEX*
   Launched in 2017 by the German government, CONNEX provides global
   multidisciplinary assistance to developing host countries in all geographic
   regions that are negotiating complex investment contracts, focusing
   primarily on the extractive sector.

The direct negotiation support provided by these institutions is
undoubtedly important. However, to reach its full potential, a number of
actions could be taken to strengthen these efforts:

   - The competent authorities in each developing country must be made
   aware of the existence of the direct negotiation support provided by these
   three institutions. Modern information technology, including through
   targeted webinars, makes it easy to mount a systematic outreach effort.
   - Negotiation support should be extended to large investment contracts
   in all sectors (not just in extractive industries and infrastructure), as
   many of the same considerations concerning fair and equitable contracts
   apply across different sectors.
   - These three institutions should consider partnerships to share their
   resources and knowledge, thus complementing each other. This would increase
   their impact.
   - More funding is needed to recruit a deep bench of multidisciplinary
   professionals (at market rates): not only lawyers, but also environmental,
   financial and industry experts, whose level of experience is comparable to
   that of the advisors of international investors. Continued reliance on *pro
   bono* advisors is not sufficient and is rarely available outside the
   legal profession.
   - In addition to seeking funding from developed countries, charitable
   foundations and high-net-worth individuals should be approached.
   International organizations (like regional development banks) could be
   called upon to support these institutions.
   - Lastly, each institution should have a fast-track mechanism to provide
   timely support in response to requests submitted by host countries. While
   countries will always seek to plan as far in advance as possible,
   situations may still arise in which negotiation will need to start within a
   very short time period, sometimes within a few weeks from receipt of the

Large-scale investment projects have substantial economic and social
impact. Developing host countries need to make sure they get the
contracts—and contractual protections—they need. For many of them, easily
accessible, affordable and specialized international negotiation support is

* <#m_-4065552014254728365__ednref1> Vanessa Tsang (
[log in to unmask]) is a paralegal at Omnia Strategy LLP. She holds
an LL.M. from Columbia Law School and a J.D. from University of Hong Kong.
This *Perspective* is based on W. Wu and V. Tsang, “Fair game, fair play:
The advocacy of international assistance for developing host states in
negotiating investment contracts,” *Journal of World Investment and Trade*,
vol. 23 (3) (2022), pp. 417-455
The author wishes to thank James Dingley and Solomon Ebere for their
feedback on an earlier version of this *Perspective *and Boris Dolgonos,
Khalil Hamdani and Lou T. Wells for their helpful peer reviews.
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Vanessa Tsang**, ‘**Strengthening international
negotiation assistance for developing host countries,**’ *Columbia FDI
Perspectives *No. 341, October 3, 2022. 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,
Abigail Greene, [log in to unmask]

*Most recent Columbia FDI Perspectives*

   - No. 340, Brian Chang and Daniel Kang, “Advancing alternatives:
   Promoting mediation and conciliation in investor-state dispute
settlement,” *Columbia
   FDI Perspectives*, September 20, 2022
   - No. 339, Christian Pitschas, “Defining investment in a future WTO
   agreement on investment facilitation for development,”* Columbia FDI
   Perspectives*, September 5, 2022
   - No. 338, Louis T. Wells, “Got ‘critical minerals’? Hooray! But be
   careful!,” *Columbia FDI Perspectives*, August 22, 2022

*All previous FDI Perspectives are available at

*Other relevant CCSI news and announcements*

   - *On October 18, 2022*, CCSI's Fall 2022 International
   Investment Law and Policy Speaker Series begins! *Visit our website
   for more details, including panelists and event descriptions.*
   - *On October 26, 2022*, CCSI will host a talk with Mark
   Koulen (Counsellor, Head of Region, Europe and Middle East, Trade Policies
   Review Division, World Trade Organization) on "What's Next for the
WTO." *Visit
   our website
   for details.*

Karl P. Sauvant, Ph.D.
Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
*Copyright © 2022 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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*Karl P. Sauvant, PhD*

*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]
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"The WTO Investment Facilitation for Development Agreement Needs a Strong
Provision on Responsible Business Conduct", *Investment Facilitation for
Development: A Toolkit for Policy Makers. Second Edition,* "Agenda for
Practice-oriented Research", "WTO Processes Would Benefit from the Input of
Civil Society", "How Would a Future WTO Agreement on Investment
Facilitation for Development Encourage Sustainable FDI Flows, and How Could
it be Further Strengthened?”, "What Foreign Investors Want: Findings from
an Investor Survey", "Incentivising Sustainable FDI", "Green FDI:
Encouraging Carbon-neutral Investment", "Extending International Legal Aid
from Trade to Investment: An Advisory Centre on International Investment
Law", "More Attention to Policies! Improving the Distribution of FDI
Benefits", "Facilitating Sustainable FDI in a WTO Investment Facilitation
Framework: Four Concrete Proposals", "An Inventory of Concrete Measures to
Facilitate the Flow of Sustainable FDI: What? Why? How?", are available at .

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