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View this email in your browser <https://mailchi.mp/law/perspective-376?e=dd153d6a25> 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看: https://ccsi.columbia.edu/content/columbia-fdi-perspectives <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=2b293831e2&e=dd153d6a25> . *Columbia FDI Perspectives* Perspectives on topical foreign direct investment issues Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) Managing Editor: Chioma Menankiti ([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. 376 February 5, 2024 *Investors’ obligations under IIAs: toward a practical solution* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e4bfeca643&e=dd153d6a25> by Kraijakr Thiratayakinant* <#m_-5140547140038864603_m_8220050736221567730__edn1> A key feature of international investment agreements (IIAs) is their investor-state dispute settlement (ISDS) mechanism. As ISDS has been successfully utilized by foreign investors, some of the public’s opinion of this mechanism has soured and resulted in something of a legitimacy crisis. This is caused, in part, by the asymmetric nature of IIAs whereby home and host states agree on each other’s obligation to protect their respective investors—while the investors, as third parties to these agreements, undertake few, if any, obligations. States have put more emphasis on policy and their right to regulate, as reflected in recent IIAs. Moreover, UNCITRAL’s Working Group III <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=3747ae6ab5&e=dd153d6a25> has been working to improve ISDS procedurally. Although these efforts address the legitimacy crisis to some extent, they do not directly tackle the asymmetry in IIAs. To do so requires the imposition and enforcement of obligations against investors, to rectify the imbalance. What kinds of obligation can be imposed on investors under IIAs? Most common are provisions on compliance with domestic laws and regulations and those related to corporate social responsibility (CSR), responsible business conduct (RBC) and human rights. Provisions on compliance with domestic laws and regulations are often found in the preamble or a stand-alone provision in IIAs; this approach is generally acceptable and linked to the “clean hands” principle <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e80311d723&e=dd153d6a25>. On the other hand, provisions related to CSR, RBC or human rights, if they exist, are most commonly formulated in the form of “best effort” clauses that usually provide that investors “should” or “shall endeavor” to promote such concepts. How these “soft” obligations are enforced through ISDS is unclear. Both kinds of obligations can be enforced through three methods. The first is to link investors’ access to arbitration to their compliance with legal rules and standards, whether in domestic or international law. The second and third methods allow countries and affected individuals to enforce legal rules and standards directly against investors through arbitration <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ca733a87d1&e=dd153d6a25> . The latter two methods require a significant reimagining of the current ISDS legal infrastructure—which is not plausible anytime soon: even with regard to states, the 1969 Vienna Convention on the Law of Treaties <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=7ce722d109&e=dd153d6a25> provides limited scope for imposing obligations on a third state. Accordingly, it would be much more complex to directly enforce an IIA obligation through arbitration against third-party investors, whose legal standing under international law is at best problematic, and whose consent to arbitration is not necessarily guaranteed. By contrast, the first method is more practical and readily implementable under the current system. As the main beneficiaries, investors are granted the right to initiate ISDS proceedings under IIAs, although they did not negotiate the provisions therein. This feature is rather unique to IIAs. Setting conditions that must be met by investors before they can access arbitration aligns with this unique feature, and investors would have the incentive to comply. In fact, similar conditions already exist in IIAs. For example, Article 9.21 of the CPTPP <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=5951dcd7fc&e=dd153d6a25> requires investors to give consent in writing to arbitration in accordance with the procedures set out therein and to include certain information in notices of arbitration. Failing to do so would render arbitration inaccessible. Consequently, an IIA obligation to comply with domestic laws and regulations, such as those on environment and anti-corruption, can be implemented in the same manner, albeit involving potentially more complex and lengthy proceedings to verify compliance. In addition, states could explicitly include a provision that obligates ISDS tribunals to take into account non-compliance with such an obligation when calculating damages, something akin to contributory fault. Where domestic laws and regulations of host states are clear on investors’ obligations, it is simpler to enforce compliance as a prerequisite to arbitration under IIAs since the corresponding IIA obligations can be linked to them, through the first method discussed above. However, where an IIA obligation only makes references to CSR, RBC or human rights more generally, or only in international law, investors will find it more difficult to comply and ISDS tribunals may not be willing to enforce the obligation. Consequently, states should incorporate—and elaborate—these concepts into their respective domestic legal systems vis-à-vis investors and their investments, to give a stronger legal basis for when IIA provisions refer, and link them, to investors’ access to arbitration. For example, states could make it compulsory under their legal systems for foreign companies investing in mining projects to comply with human rights legislation or human rights conventions to which they are a party. Until the time when it is widely acceptable to directly enforce IIA obligations against investors through arbitration, linking arbitration access to compliance with investors’ obligations is the most practical way to deal with the asymmetry in IIAs. ------------------------------ * <#m_-5140547140038864603_m_8220050736221567730__ednref1> Kraijakr Thiratayakinant ([log in to unmask]) is Head of International Agreements Sub-division at Department of International Economic Affairs, Ministry of Foreign Affairs of Thailand. The opinion expressed here is solely his own and does not reflect the position of the Royal Thai Government. The author wishes to thank Lukas Stifter, Gus Van Harten and Don Wallace for their helpful peer reviews. *The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “Kraijakr Thiratayakinant,** ‘**Investors’ obligations under IIAs: toward a practical solution,**’ Columbia FDI Perspectives, No. 376, February 5, 2024. Reprinted with permission from the Columbia Center on Sustainable **Investment (*http://ccsi.columbia.edu <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=e0e6bf366e&e=dd153d6a25>*).” 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, Chioma Menankiti, [log in to unmask] *Most recent Columbia FDI Perspectives* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=5edd24f77b&e=dd153d6a25> - No. 375, Reuven Avi-Yonah, ‘The global corporate minimum tax and MNE home countries <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=05edc73aae&e=dd153d6a25> ,’* Columbia FDI Perspectives*, January 22, 2024 - No. 374, Catharine Titi, ‘Why public policy exceptions have not delivered and how to make them more effective <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=6c57996466&e=dd153d6a25>,’ *Columbia FDI Perspectives*, January 8, 2024 - No. 373, Bamituni Etomi Abamu, ‘Reducing the reliance on global value chains by strengthening backward linkages <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=c015b3c077&e=dd153d6a25>,’ *Columbia FDI Perspectives*, December 26, 2023 *All previous FDI Perspectives are available at https://ccsi.columbia.edu/content/columbia-fdi-perspectives <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=2959f5f448&e=dd153d6a25>* . *Other relevant CCSI news and announcements**:* - *Applications are now open* for our virtual 2024 Executive Training Program on Sustainable Investments in Agriculture <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=13ea4d2df8&e=dd153d6a25>, which will be held from *May 7-17*. The interdisciplinary program explores challenges and solutions for advancing sustainable investments in agriculture. It includes asynchronous and synchronous components, including short and interactive live sessions dedicated to engagement with course lecturers and participants from around the world. Applications will be considered on a rolling basis until March 15, 2024. *For more information, and to apply, visit our website <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=bd5ab7d885&e=dd153d6a25>.* - *Apply by April 30th* for our virtual 2024 Executive Training on Extractive Industries and Sustainable Development <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=585bb4c5c9&e=dd153d6a25> to be held *June 3-14. *The two-week training emphasizes the interdisciplinary nature of resource-based development. By working through case studies and with practitioners and experts in the field, participants will be able to apply analytical tools and frameworks to the unique context of the extractive industries in their country. *For more information, and to apply, visit our website <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=0e5fcbff83&e=dd153d6a25>.* Karl P. Sauvant, Ph.D. Senior Fellow Columbia Center on Sustainable Investment Columbia Law School - Columbia Climate School *Copyright © 2024 Columbia Center on Sustainable Investment (CCSI), All rights reserved.* [log in to unmask] *Our mailing address is:* Columbia Center on Sustainable Investment (CCSI) Columbia Law School - Columbia Climate School, Columbia University 435 West 116th Street New York, NY 10027 Add us to your address book <https://columbia.us6.list-manage.com/vcard?u=ab15cc1d53&id=a61bf1d34a> unsubscribe from this list <https://columbia.us6.list-manage.com/unsubscribe?u=ab15cc1d53&id=a61bf1d34a&t=b&e=dd153d6a25&c=ab48a1c4e2> update subscription preferences <https://columbia.us6.list-manage.com/profile?u=ab15cc1d53&id=a61bf1d34a&e=dd153d6a25&c=ab48a1c4e2> [image: Email Marketing Powered by Mailchimp] <http://www.mailchimp.com/email-referral/?utm_source=freemium_newsletter&utm_medium=email&utm_campaign=referral_marketing&aid=ab15cc1d53&afl=1> *Karl P. Sauvant, PhD* *Senior Fellow* *Columbia Center on Sustainable Investment* Columbia Law School, 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: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "How to Get the Best Deal for Massive FDI Incentives <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4616026>", "The New WTO Investment Facilitation for Development Agreement <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4531684>", "The Limits of Capacity Building for Investment Contract Negotiations <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4474456>", "Establishing an Advisory Centre on International Investment Law: Key Challenges Ahead <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4389689>", *Investment Facilitation for Development: A Toolkit for Policy Makers. Second Edition <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3830031>,* "Agenda for Practice-oriented Research <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4103768>", "How Would a Future WTO Agreement on Investment Facilitation for Development Encourage Sustainable FDI Flows, and How Could it be Further Strengthened? <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4084032>”, "Green FDI: Encouraging Carbon-neutral Investment <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3943705>", "More Attention to Policies! Improving the Distribution of FDI Benefits <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3818974>", "Facilitating Sustainable FDI in a WTO Investment Facilitation Framework: Four Concrete Proposals <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3496967>", "An Inventory of Concrete Measures to Facilitate the Flow of Sustainable FDI: What? Why? How? <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3739179>", are available at https://ssrn.com/author=2461782 . ____ AIB-L is brought to you by the Academy of International Business. For information: http://aib.msu.edu/community/aib-l.asp To post message: [log in to unmask] For assistance: [log in to unmask] --- You must be an active AIB member to post to AIB-L . AIB-L has a moderator which checks messages for basic relevance. However, AIB does not edit or screen messages for accuracy or reliability of content. All subscribers are recommended to perform their own due-diligence before responding to any requests or calls. AIB accepts no liability for the content of this email, or for the consequences of any actions taken on the basis of the information provided.