The third-largest group crossing the Mediterranean is fleeing Eritrea, home to one of the most corrupt and brutal regimes in the world, and Canadian mining companies.
Sourced through Scoop.it from: rabble.ca
Geneva, 17 Sep (D. Ravi Kanth) — The United States has signalled its intention to dismantle the special and differential treatment (S&DT) accorded to resource-poor farmers of the developing countries in the Agreement on Agriculture (AoA) ahead of the World Trade Organization’s tenth ministerial conference in Nairobi, several authoritative people told the SUNS. At a closed door meeting of capital-based senior trade officials from seven major developed and developing countries held at the Australian mission on September 15, the US circulated a non-paper called “proposal on domestic support” in which it has proposed a decision to be taken at the Nairobi ministerial meeting. Senior trade officials from the US, the European Union, China, India, Brazil, Australia, and Japan, along with the WTO director-general Roberto Azevedo discussed the possible package of decisions that would be taken at the Nairobi ministerial meeting commencing on December 15. Over one-and-half days of intense discussions, including a dinner meeting on Tuesday, the seven plus the DG spent considerable time on the most contentious area of agriculture and the fate of all unresolved issues in the Doha Development Agenda by the tenth ministerial meeting. After having failed to arrive at a post-Bali work program, clearly mandated in the ministerial declaration at the ninth Ministerial Conference at Bali, Indonesia, in December 2013, the seven countries and the DG have sought to prepare for possible outcomes that they can agree in the next 90 days. During the meeting on Tuesday, there was a fierce standoff on agriculture, particularly in the domestic support pillar, in which the US is required to suggest what Washington is going to do given the limit of US$14.5 billion that was proposed in the 2008 revised draft modalities. The three major developing country participants – China, India, and Brazil – strongly demanded “credible” outcomes based on the 2008 revised draft modalities. The modalities of the revised fourth version of draft text proposed clear reduction commitments of subsidies in the domestic and export competition pillars, and market access for developing and the developed countries. It also proposed special flexibilities for small and vulnerable economies and least-developed countries. More importantly, the 2008 revised draft was based on the previous ministerial decisions since the launch of the Doha negotiations in 2001. However, at the meeting, the US chose to wage an unprecedented assault on the S&DT provisions as set out in the Uruguay Round Agreement on Agriculture. Without suggesting what it is prepared to agree upon for reducing its amber box, de minimis, and new blue box farm payments, the US tabled a two-page non-paper targeting the market price support (MPS) programs and the input subsidies that developing countries are allowed to provide to their resource-poor farmers under the S&DT provisions in the Agreement on Agriculture. The US paper has called for “standstill” commitments in MPS and input subsidies despite Article 6.2 of the AoA which was concluded in the Uruguay Round Agreement. This provision in the AoA says: “In accordance with the Mid-Term Review Agreement that government measures of assistance, whether direct or indirect, to encourage agricultural and rural development are an integral part of the development programmes of developing countries, investment subsidies which are generally available to agriculture in developing country Members and agricultural input subsidies generally available to low-income or resource-poor producers in developing country Members shall be exempt from domestic support reduction commitments that would otherwise be applicable to such measures, as shall domestic support to producers in developing country Members to encourage diversification from growing illicit narcotic crops. Domestic support meeting the criteria of this paragraph shall not be required to be included in a Member’s calculation of its Current Total AMS.” Despite this provision in the AoA, the US non-paper explicitly says, “Without prejudice to Members’ rights and obligations under the WTO Agreement on Agriculture, including Article 6.2, each Member should avoid using market price support and input subsidies for agricultural products.” The US said that “each member undertakes the commitments in Annex A (of the non-paper).” The Annex A, as proposed by the US, says categorically: “Each Member shall, with respect to agricultural products, undertake each commitment set forth in its schedule to this Annex, which shall include: a) not increasing either the applied administered price for any agricultural product receiving market price support or the number of agricultural products to which the Member provides market price support; or b) not increasing its budgetary outlays for, or the scope of, product-specific input subsidies for agricultural products above the level in effect as on the date of this Ministerial decision”. Washington specifically provided examples in its paper as to what each member is required to do. They include: “[Member X – Member X shall not provide support for any agricultural product for which market price support is not authorized under its domestic law as of the date of this Ministerial Decision.] [Member X – For any agricultural product for which market price support is authorized under the domestic law of Member X as of the date of this Ministerial Decision, Member X shall not maintain an applied administered price higher than the applied administered price as of the date of this Ministerial Decision.] [Member X – Member shall not provide any product-specific input subsidy for any agricultural product not eligible under its domestic law to receive a product-specific input subsidy as of the date of this Ministerial Decision.] [Member X – Member X shall not increase, above levels for the last full year preceding the date of this Ministerial Decision, budgetary outlays for the subsidization of any agricultural product effectuated by means of product-specific input subsidies on the following inputs: fertilizer, seeds, electricity, or diesel fuel.]” Incidentally, both the US and the EU do not have to undertake any commitments in MPS and input subsidies. The US, for example, does not provide MPS except for sugar. Effectively, the two trade majors are exempt from undertaking any commitments on MPS and input subsidies. But all developing countries, particularly countries that provide public distribution programs for which they procure from resource-poor farmers at market prices and offload at reduced prices for vulnerable sections of the society, are most affected by the American proposal to do away with S&DT flexibilities. Senior officials from China, India, and Brazil dismissed the US non-paper, saying it is unacceptable under any circumstances. China and India said the aim of the US proposal is to kill S&DT provisions once and for all. The three developing country participants asked whether the outcomes in the domestic support will be decided on the basis of the 2008 modalities. The DG, who was present at the meeting, remained silent on the US proposal, said people familiar with the meeting. “He did not take any positions this time around and navigated himself well,” said a negotiator present at the meeting. More importantly, the US paper did not mention any of the existing Doha mandates beginning with the 2001 Doha Ministerial Declaration, the July 2004 ministerial decision on the Framework Agreement, the 2005 Hong Kong Ministerial Declaration, and the unresolved 2008 revised draft modalities. Like the infamous deal between the US and the EU on 20 August 2003 prior to the WTO’s third ministerial conference in Cancun, Mexico, in which the two trade elephants neatly worked out an arrangement to protect their overlapping concerns in the domestic support and market access, the latest US non-paper also ensured that both Washington and Brussels need not undertake any commitments, said people familiar with the meeting. [That pre-Cancun deal of the US and EU resulted in the formation of the G-20 coalition on agriculture, and ultimately wrecked the Cancun Ministerial Conference itself. SUNS] A South American trade official said the US paper will never fly and it has zero chance of acceptability. At the meetings earlier this week, the three developing countries maintained that without credible outcomes in the domestic support pillar, there will be no progress at the Nairobi meeting. However, the US has insisted that its non-paper has offered “a new idea” under which all subsidisers would be expected to make a contribution. In an article titled “Farm Program Elections, Budget Costs, and the WTO,” published in Choices Magazine in the US, the former US chief trade negotiator Joseph Glauber along with Patrick Westhoff, and Scott Gerit wrote that the latest US farm bill enacted last year goes beyond the proposed commitments in the 2008 modalities. “Because of the shift to a much more extensive reliance on amber box [most trade distorting] subsidies and other less direct forms of income transfers to farmers, the 2014 farm bill has complicated trade negotiations by making compliance issues more problematic, especially in the context of the 2008 DDA proposal for substantially lower limits on farm subsidies,” Westhoff, Gerit, and Glauber wrote in their article. Despite continued disagreements, the four industrialized country participants – the US, the EU, Australia, and Japan – pushed hard at the meeting for a small package of outcomes at the Nairobi meeting. Their small package includes issues in the export competition pillar, the package of concessions for the least-developed countries, liberalized accession requirements for new members, and ratification of the Trade Facilitation Agreement. Even in the export competition pillar, the US said it will not accept the disciplines for export credits and food aid as laid out in the 2008 revised draft modalities. The term of 180 days for export credits and monetization provisions in the revised modalities are not acceptable to the US. On the LDC package, the four major industrialized countries maintained that they have already addressed most of the issues but did not clearly offer any assurance for binding outcomes at the Nairobi meeting, said people familiar with the meeting. In sharp opposition, China, India, and Brazil called for credible outcomes at Nairobi while continuing the negotiations on all unresolved Doha issues after the tenth ministerial conference. The three developing countries also adopted a common stand for the end of the Doha Round. During the meeting, the US said somewhat bluntly that Doha is like a “patient” which is dead but needs a doctor to certify the death. The EU maintained that the Doha negotiations cannot continue endlessly while Australia and Japan also agreed that Nairobi should be the last point, according to people familiar with the meeting. China sharply disagreed with the US, maintaining that Beijing doesn’t agree that Nairobi is the last point. China said all remaining issues which could not be addressed due to paucity of time must be taken up after the Nairobi meeting. India said the Doha negotiations shall continue until all issues on the table are addressed. Brazil said it doesn’t believe that Doha is dead as all the issues in the DDA remain alive, according to people familiar with the meeting. In short, the US along with the major developed countries has set the ground for taking the life out of the Doha negotiations at Nairobi. The US also launched a war-like campaign against S&DT provisions for the developing countries which could come into effect after the Nairobi meeting. It remains to be seen how developing countries will come to terms with an outcome that has hollowed out the developmental goals set out in the DDA. + Trade: Investment accords – conceptual & procedural contentions Geneva, 17 Sep (Andrew Cornford*) — The first part of this article (SUNS #8094 dated 17 September 2015) dealt mainly with framework issues of the Indian model treaty such as the definition of investments covered, exceptions and non-applicability, and the major obligations of the two parties (Indian and external). The second part below focuses on particular issues and procedures in investment treaties which have proved especially contentious at both conceptual and practical levels. In the Indian model treaty, nationalisation and expropriation “for reasons of public purpose” is legitimate but must be accompanied by adequate compensation. The determination of whether a measure or measures should be classified as expropriation “requires a case-by-case, fact-based inquiry.” The evidence that expropriation has taken place should include the following: “(i) permanent and complete or near complete deprivation of the value of the Investment; and (ii) permanent and complete or near complete deprivation of the Investor’s right and management and control over the Investment; and (iii) an appropriation of the Investment by the Host State which results in transfer of the complete or near complete value of the Investment to that party or to an agency or instrumentality of the Party or a third Party” (Article 5.2). “Non-discriminatory actions by a Party that are designed and applied to protect legitimate public welfare objectives such as public health, safety and the environment shall not constitute expropriation” (Article 5.4). These conditions are stringent and are likely to narrow the range of cases in which the existence of expropriation can be demonstrated. They are consistent with correspondingly stringent rules concerning exceptions (already discussed) and dispute settlement (see below). COMPENSATION The main issues under the heading of compensation concern the period of time before compensation is paid (promptness), the form in which it should be paid (sometimes characterised as effectiveness of compensation), and how much. The third of these issues is the crucial one since performance under the other two depends on settlement of the question of how much. Under the heading of promptness allowance has to be made for delays due to the resolution of practical problems which have to be dealt with in disputes. Delays are often reflected in interest charges which accrue from the date of the expropriation. The rules as to the form in which payment is made usually guarantee that the currency of payment should be convertible and not subject to restrictions on transfer. If payment is made in financial instruments, the rules guarantee their value (with compensation for discounts from face value, etc.). Concerning how much compensation should be paid, agreement is necessary as to the date of expropriation or other forms of “taking”. This is often contentious since the loss of earnings which is to be compensated will be determined by the extent of expropriation or “taking” on this date. But the most difficult problem associated with how much compensation should be paid is that of valuation of the assets or the “taking”. Terminology under this heading is fluid. The concepts denoting compensation go under several names: “market value”, “fair market value”, “genuine value”, and “just compensation”, but mostly boil down to one of a limited number of valuation methods. A useful classification of these methods is that of Robert Herz, former chairman of the United States Financial Accounting Standards Board (FASB) (Herz, 2013: 182-191). This classification consists of three headings: (i) amortised cost, the original cost minus amortisation plus the sum to be received at final settlement; (ii) fair value, the amount for which an asset could be exchanged between knowledgeable parties in an arms-length transaction; and (iii) current value, the present discounted value of the future net cash flows that an asset is expected to generate. Each of these valuation methods has advantages and disadvantages. * Amortised cost is based on contractual features of an asset and thus avoids the misleading volatility and noise which often characterise reported financial results. * Supporters of fair value stress incorporation by the concept of current market and economic conditions, and not the past costs and prices used to estimate amortised costs. But application of fair value can be problematic when market prices are not available. In their absence, United States accounting rules suggest alternatives such as the prices of similar assets or valuation based on models. * Current value picks up the phasing in time of inflows and outflows associated with an asset and also makes possible the incorporation of the effects of changes in interest rates through the discount rates used in estimation. The problem with current value is due to the difficulty of identifying in advance the future inflows and outflows used in the calculation. Cursory consideration points to the difficulties associated with these valuation methods in investment disputes, especially when one of the parties is a developing country lacking a market for the shares of the investment in question or characterised by economic conditions that complicate estimation of prospective revenues and costs. In the case of the Iran-United States Tribunal, where identification of the nature and extent of the “taking” was itself often a complex matter, “each case was examined in detail, with accountants and industry experts, in some instances presented by the parties, in others called by the Tribunal itself. The awards rarely accepted the experts’ detailed submissions but reflected also the judgements of the Chamber hearing the case” (Lowenfeld, 2008: 552). While Bilateral Investment Treaties often specify criteria for compensation in cases of expropriation or measures tantamount to expropriation, corresponding criteria are not included for other violations of treaty terms (such as National Treatment, Fair and Equitable Treatment, or protection and security). In such cases arbitral tribunals have typically borrowed from rulings concerning expropriation (Lowenfeld, 2008: 567). The absence of such criteria makes judgements under such treaties concerning, for example, the impact of regulation more unpredictable or even arbitrary. Under the Indian model bilateral investment treaty, compensation “shall be adequate and reflect the fair market value of the expropriated Investment, as reduced after application of relevant Mitigating Factors” (Article 5). The Mitigating Factors specified include the following: (a) current and past use of the Investment; (b) duration and previous profits; (c) compensation and insurance pay-outs received from other sources; (d) options available for the mitigation of losses and reasonable efforts made towards such mitigation; (e) conduct of the Investor which has contributed to damaging the Investment; (f) relief of obligations due to the expropriation; (g) liabilities owed to the government of the host state; (h) unremedied harm or damage to the environment or to the local community; (i) other relevant considerations regarding the need to balance the public interest and the interests of the Investment. Moreover, “The computation of the fair market value… shall exclude any consequential or exemplary losses or speculative or windfall profits claimed by the Investor, including those relating to moral damages or loss of goodwill” (Article 5). The Mitigating Factors and the exclusion of speculative gains are clearly capable of significantly constraining the amount of compensation. Moreover, the rules of the Indian model treaty leaves unsolved the problem mentioned above of which method of valuation should be used, a problem likely to be especially difficult to resolve in the case of takings other than straightforward expropriation. FINANCIAL TRANSFERS AND ENTRY AND SOJOURN OF PERSONNEL Cross-border financial transfers and the access of foreign personnel in connection with operations linked to the investment are subjects which also arise under the heading of international trade in financial services of the WTO General Agreement on Trade in Services (GATS). On transfers, Article 6 of the Indian model bilateral investment treaty specifies rules similar to those of Article XI of the GATS which permit all funds of an investor related to an investment in its territory to be freely transferred. Likewise, the treaty permits temporary restrictions on transfers “in the event of serious balance-of-payments difficulties or threat thereof, or in cases where, in exceptional circumstances, movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular, monetary and exchange rate policies” (Article 6). Government policy regarding transfers would also be covered by the General Exceptions of Article 16 which include actions and measures “remedying serious balance-of-payments problems, exchange rate difficulties and external financial difficulties or threat thereof”. On the access of foreign persons, each of the parties to the treaty shall permit persons of the other party and employees of the investor or investment, subject to domestic law and considerations of reciprocity, to enter and remain in their territory for the purpose of engaging in activities connected to the investment (Article 7). Under Article 16 of the WTO GATS, limitations on the access of foreign persons employed in connection with the cross-border provision of financial services are to be a subject in the negotiation of specific commitments. DISPUTE SETTLEMENT/ISDS Dispute settlement is now one of the most contentious of the subjects of bilateral and multilateral trade and investment treaties. This is to a significant extent due to provisions for ISDS (Investor-State Dispute Settlement). As of 1945 investment disputes were settled either through national courts or through international tribunals of which the most important was the International Court of Justice. Article 34 of the latter’s statute permits only states to be parties before the Court. Thus, if a private investor wanted to bring a suit against a government, the investor would have had to persuade its government to pursue the case on its behalf, thus transforming the case into a dispute between states (Folsom, Gordon and Spanogle, 1991: 1098-1101). The proliferation of investment disputes during the following 20 years, due partly to de-colonisation, communist governments in some states, and more assertive national economic policies in many developing countries, was the inspiration for the establishment of the ICSID (International Centre for the Settlement of Investment Disputes, as described above), which accommodated agreements between private parties and States for the purpose of arbitration or adjudication, although as of the 1980s, in only about 40 per cent of bilateral investment treaties was the private investor provided with direct access to arbitration; in the remainder, working through national governments was still required. (Guertin 1990: 125). The following years witnessed expansion in the number of agreements covering international investment as well as changes affecting the scope and character of such agreements. Bilateral investment treaties remain the most frequent form of such agreements but investment-related provisions are now also included in economic partnership agreements, free trade agreements, agreements for regional economic integration, and framework agreements for economic cooperation. Such agreements often include more than two countries as parties and cannot thus be classified as bilateral. This has led to the use of the term international investment agreement as the umbrella class. Expansion in the number of international investment agreements has been accompanied by not only expansion in the number of investment disputes subject to adjudication or arbitration but also by an increase in the number of cases involving ISDS. Under arbitral tribunals (ICSID and others), dispute settlement involves interpretation of applicable agreements which may or may not include the possibility of ISDS. Article 25 of the ICSID Convention defines Nationals of Other Contracting States to include foreign corporations and other juridical entities whom the parties have agreed should be treated as eligible for arbitration under the Convention. Recourse to ISDS is now substantial. By the end of 2014, according to the UNCTAD data bank, the number of concluded ISDS cases had reached 356 (UNCTAD, 2015: 8). Under the ICSID Convention, arbitration usually involves three arbitrators, one selected by each of the parties to the dispute (host state and investor) and a presiding arbitrator agreed by the two parties or, if they cannot agree, by the chairman of the ICSID, ex officio the president of the World Bank. This pattern of selection follows that of other international arbitration tribunals. In view of these procedures and the now substantial history of ICSID and other similar tribunals, why has the subject of ISDS recently become so contentious? Partly this is simply a case of the way in which bilateral and multilateral agreements with an extensive and potentially intrusive scope as far as national regulation is concerned provide enterprises but not other groups (such as trade unions and civil-society groups) privileged access to arbitration and adjudication by offshore tribunals, with in many cases no provision for appeal against their decisions. Moreover, the range of subjects covered in international investment agreements has broadened to large parts of domestic regulation of the environment, investment and finance, intellectual property, etc. The consequences can be perverse. Control of cross-border capital movements, for example, are increasingly accepted as a necessary part of the armory of policy measures for handling systemic financial risk and the management of the balance of payments. Conflicts between IMF recommendations as to the use of such measures could easily conflict with obligations undertaken by a country under an international investment agreement. Estimating compensation in favour of investors in cases brought by them concerning a country’s regulation presents difficult problems. As noted above, such estimates have long been made in cases of this kind. However, established guidelines are lacking with the result that estimates of risk are unpredictable and arbitrary. How, for example, would estimation be approached for compensation of an investor due to the effect on an investment of the imposition of capital controls? The growth of ISDS in arbitration under bilateral investment treaties has been accompanied by systemic features which raise serious questions about the justice of the decisions reached. These features (as listed in a speech by George Kahale (Kahale, 2014)), a senior arbitration lawyer, include the following: * A “club of international arbitrators” is shaping a new body of international law, though in many cases the members of the club are not well versed in international law. Members of this group are also dependent upon the parties or arbitral institutions for future appointments – a dependence which all too easily compromises their conduct in particular cases. * Bilateral investment treaties often contain overly expansive provisions concerning Fair and Equitable Treatment and Most-Favoured Nation. * “Mega cases” based on a cavalier approach to legal principles and worth more than USD1 billion have been brought against states. Claims have sometimes been of the same order of magnitude as the country’s GDP. * Although there is nothing to stop an arbitrator from applying a personal interpretation of law, their decisions can be characterised by finality in the absence of procedures for appellate review. * In view of the selection procedures for arbitrators, impartiality is difficult to achieve. As Kahale puts it, “Experienced practitioners are able to predict the outcome of a case purely based on the composition of the tribunal”. * A bias against states and in favour of investors is perceived by many observers. Kahale acknowledges that there are studies showing that states win more than 50 per cent of cases but counters that this figure is “meaningless, if that same figure happens to represent the percentage of cases that never should have seen the light of day or that would never survive a motion to dismiss in a national court”. The approach to ISDS of the Indian model investment treaty is to restrict investors’ rights under the treaty regarding recourse to external arbitration. The rights apply only to investors and investments specified in the treaty. Thus, the disputes admitted are those dealing with treatment of the investor, expropriation, transfers, and entry and sojourn of the investor’s personnel. Excluded from the treaty’s scope are portfolio investments (Article 1). Moreover, as already mentioned, cross-border transfers related to investments (such as contributions to capital, profits, interest, royalties, and management fees) must meet conditions as to compliance with a broad range of local laws and regulation (including those concerning labour obligations, and taxation) (Article 6). The control of cross-border capital movements is not only permitted as a response to balance-of-payments difficulties but may also be justified by macro-prudential reasons since, as also mentioned above, under Article 6: temporary restrictions on transfer are deployed when movements of capital cause or threaten to cause serious difficulties for macroeconomic management, in particular, monetary and exchange rate policies. The Indian model treaty’s procedures to be pursued in investment disputes include the exhaustion of local remedies and other conditions which must precede submission of a dispute to external arbitration (Article 14). The investor must establish that continued pursuit of domestic relief would be futile because (1) there are no reasonably available legal remedies in the respondent country capable of providing relief regarding the dispute in question, or (2) the process for obtaining legal relief provides no reasonable possibility of obtaining such relief in a reasonable period of time. Even after the transmission of the Notice of Dispute to the designated representative of the respondent party the disputing investor and the respondent party are to use their best efforts to resolve the dispute amicably through consultation, negotiation, or continued pursuit of any available domestic remedies or solutions. Non-compliance with any of the conditions set out under these procedures leads to the barring of the investor from taking subsequent steps to pursue external arbitration of the dispute. Counter-claims against the investor are possible for breaches by the investor of obligations under the treaty regarding corruption, disclosure, taxation, and compliance with the law of the host state. Explicitly mentioned here are laws relating to labour and wages, environmental and conservation law, human rights, and fair competition and consumer protection. The eventual appointment of three arbitrators is subject to detailed provisions regarding conflicts of interest. Such a conflict will be deemed to exist in the presence of various circumstances including the following: * the arbitrator is or has been a legal representative of the appointing party or an affiliate of the appointing party in the three years preceding the commencement of the arbitration; * the arbitrator is a lawyer in the same law firm as the counsel to one of the parties; * the arbitrator is acting concurrently with the lawyer or law firm of one of the parties in another dispute; * the arbitrator’s law firm is currently rendering or has rendered services to one of the parties or to an affiliate of one of the parties from which the law firm derives a significant financial interest; * the arbitrator has been comprehensively briefed by the appointing party concerning the merits or procedural aspects of the dispute prior to appointment; * the arbitrator has publicly advocated a fixed position regarding an issue in the case to be arbitrated. These conditions should reduce the opportunities for the conflicts of interest and other abuses of the arbitral proceedings in investment disputes which were described earlier. Under Burden of Proof and Governing Law (Article 14), the treaty is to be interpreted “in the context of the high level of deference that international law accords to States with regard to their development and implementation of domestic policies”. More specifically, the governing law for the interpretation of the treaty by the arbitral tribunal should be the treaty itself, the general principles of public international law relating to the interpretation of treaties, and – for matters relating to domestic law – the law of the home state of the respondent. The investor must establish a breach of the respondent’s obligations under the Scope and General Provisions of the treaty (Article 2 that specifies the subjects to which the treaty applies and subjects excluded from its scope). Moreover, the investor must have suffered actual and non-speculative losses as a result of the breach, and the losses must have been foreseeable and directly caused by the breach. Decisions as to the award of compensation are to be reached by a majority of votes of the arbitral tribunal. Provisions as to the amount of compensation, which are set out under expropriation, were discussed above. SUGGESTIONS AS TO ALTERNATIVE APPROACHES The Indian model bilateral investment treaty contains strong stand-alone rules. Other possible ways of confronting perceived shortcomings of investment and trade treaties have also been suggested. Two such alternatives are contained in proposals of the Global Economic Governance Programme of the Oxford University Blavatnik School of Government. One of these alternatives, which is intended for the TTIP (Transatlantic Trade and Investment Partnership) negotiations but could also be deployed in accords between developing and developed countries is an “ISDS Patches Model”. The other, which is designed specifically for developing countries, involves the use of state interpretation of investment treaties. The “ISDS Patches Model” is designed to limit recourse to investment arbitration by ensuring that ISDS is an option only in exceptional cases (Kleinheisterkamp and Poulsen, 2014): * The first decision on the legality or illegality of acts subject to dispute settlement would be taken by local courts (the “first patch”). This will ensure that investment arbitration is the last rather than the first resort in an investment dispute. * Under the “second patch”, there would be a comprehensive state “filter” of private claims by home and host states. If both agree, the dispute should be settled by domestic judges rather than international arbitrators. The objective here would be to safeguard public policies regarding subjects such as taxation, financial stability, environmental protection, health concerns, and consumer protection. * The “third patch” would allow parties to issue binding joint and prospective interpretations of the provisions of an investment agreement. This possibility would give states greater control over the arbitral process by steering the development of the law created by the agreements. * Under the fourth “patch”, investors and states would be given the opportunity to appeal the decisions of arbitral tribunals before an independent appellate body analogous to that available at the WTO. This would help to avoid the lack of coherence and occasional contradictions which sometimes characterise the decisions of arbitral tribunals. The second proposal would involve state interpretation of investment treaties. States would use their full powers to limit and shape the interpretive power of arbitral tribunals regarding investment treaties (Gertz and St John, 2015). This could be done in three ways: (1) through unilateral statements of particular clauses of treaties submitted by a non-disputing as well as a disputing party; (2) joint statements with treaty partners providing agreed clarification and interpretation of clauses for future tribunals; and (3) joint statements by a number of states – not necessarily all parties to the same treaty – on mutually agreed interpretations of provisions common to many investment treaties. Each of these options is concerned primarily with procedures to be followed in arbitration of investment disputes. The first two “patches” of the “ISDS Patches Model” are drafted in the same spirit as the Indian model bilateral investment treaty. But unlike the model treaty, neither proposal includes rules tailored to the particular issues likely to arise in investment disputes. RECENT INDIAN DEVELOPMENTS In response to criticism that the Indian model bilateral investment treaty is too one-sided regarding certain subjects and may excessively deter foreign investment, there have been indications of official reconsideration of key provisions in the form of a review in a recent report of the Law Commission of India (Krishnan, 2015). Particular subjects covered by this review which may lead to modified provisions in a revised version of the model treaty include the following: (1) extension of the definition of investments covered to include portfolio investments as well as foreign enterprises (Article 1); (2) more flexible rules than the obligatory exhaustion of recourse to local courts with no allowance for re-examination by an arbitral tribunal of legal issues “finally settled by any judicial authority of the host state” or review of the merits of a decision made by such an authority (Article 14); and (3) the substitution of internationally agreed minimum standards to replace the exclusive authority accorded to the government of the host state to decide when it invokes exceptions to justify actions or measures regarding such subjects as public health, the environment, public order and morals, working conditions, and financial stability (Article 16). The eventual outcome of any modifications is unpredictable since arguments are likely to be put forward against major modifications of the model treaty. Greater openness to portfolio investments can easily become a vehicle for back-door (unwanted) liberalisation of cross-border capital movements. Moreover, a difficult balance would need to be achieved in a strengthening of the role of arbitral tribunals in relation to that of local law and courts. Finally, minimum international standards may be an inadequate substitute for state policy autonomy regarding exceptions to the treaty. [* The above is the second part of a two-part article contributed by Mr Andrew Cornford of the Observatoire de la Finance in Geneva. The first part was published in SUNS #8094 dated 17 September 2015.] + Rights: UN report finds grave violations in Sri Lankan conflict Geneva, 17 Sep (Kanaga Raja) — Gross violations were committed by both state actors and the Liberation Tigers of Tamil Elam (LTTE) in the armed conflict in Sri Lanka between 2002 and 2011, and many of these allegations may amount to war crimes and/or crimes against humanity, a United Nations report has found. The report by the Office of the UN High Commissioner for Human Rights (OHCHR) has, amongst others, recommended that a hybrid special court be established, integrating international judges, prosecutors, lawyers and investigators, as an essential step towards justice. The overarching report was accompanied by a more detailed 251-page report of the OHCHR investigation on Sri Lanka (OISL), conducted by a special team established by former High Commissioner for Human Rights Ms Navi Pillay. At a media briefing on Wednesday, UN High Commissioner for Human Rights Mr Zeid Ra’ad Al-Hussein said that the report reveals the findings of a fully fledged human rights investigation conducted for the first time by the UNHCHR office, and gives examples of the crimes perpetrated against, and the suffering of, tens of thousands of victims over a nine-year period. “It draws us ever closer to the conclusion — to be confirmed subsequently by a court properly constituted — that war crimes and crimes against humanity — violations that are among the most serious crimes of concern to the international community as a whole — have apparently been committed by state actors. And not just state actors, but by the LTTE and other paramilitary groups as well,” he said. “It is our earnest belief and hope [that] this report will lead to efforts to end impunity for these crimes. That it will create a most intense reckoning with the past; the recognition [that] there are simply too many families throughout Sri Lanka who have suffered appallingly, too many who have disappeared, too many pushed into exile, too many funerals organised, too much pain felt, and too much lost in terms of Sri Lanka’s human and economic development, for the past not to be stared down, not to be learned from and atoned for.” According to the High Commissioner, the report reveals patterns of grave violations, indicating that war crimes and crimes against humanity were likely committed by both sides to the conflict. The report lays bare the horrific level of violations and abuses, including indiscriminate shelling, extrajudicial killings and enforced disappearances, and contains harrowing accounts of torture and sexual violence, he said. It also covers the recruitment of children by the LTTE and paramilitary groups, long term deprivation of the liberty of hundreds of thousands of internally displaced people, denial of humanitarian assistance and other grave crimes, he added. “Given war crimes and crimes against humanity can only be proven in a court of law, one of the most significant recommendations contained in the report is the proposed establishment of a hybrid special court, integrating international judges, prosecutors, lawyers and investigators,” said the High Commissioner. He stated that the commitment by the new Government – which has undeniably taken a number of positive steps since President Mathiripala Sirisena was elected last January – to pursue accountability is commendable. “However, it is, I believe, an inescapable reality that Sri Lanka’s criminal justice system is not yet ready to handle these types of crimes. First and foremost, there is the absence of any reliable system for victim and witness protection. Second, is the inadequacy of Sri Lanka’s domestic legal framework to deal with international crimes of this gravity and scale. The third challenge is the degree to which Sri Lanka’s security sector and justice system have been distorted and corrupted by decades of emergency, conflict and impunity.” The High Commissioner underlined that it is for these reasons that the establishment of a hybrid special court, integrating international judges, prosecutors, lawyers and investigators, becomes so necessary. “Nevertheless, the new political context in Sri Lanka is encouraging, and I believe the international community should remain engaged and support and accompany this process, including in the setting up of such a hybrid special court.” The OHCHR report, which is due to be presented at the thirtieth session of the Human Rights Council that got underway on Monday, stressed that it represents a human rights investigation, and not a criminal investigation. It noted that from the outset, the Government of Sri Lanka “categorically and unreservedly rejected” resolution 25/1 (which, amongst others, requested the OHCHR to undertake the investigation) and refused to engage “in any related process”. “Former Government ministers and officials repeatedly criticised and vilified the OHCHR investigation in public and, more seriously, resorted to an unrelenting campaign of intimidation and harassment against victims, witnesses and civil society who might seek to provide information to the inquiry.” Since January 2015, the tenor of the Government’s engagement with OHCHR changed markedly. Although the new Government did not change its stance on cooperation with the investigation, nor admit the investigation team to the country, it engaged more constructively with the High Commissioner and OHCHR on possible options for an accountability and reconciliation process, said the report. Among the principal findings of the OHCHR investigation on Sri Lanka are that the sheer number of allegations, their gravity, recurrence and the similarities in their modus operandi, as well as the consistent pattern of conduct they indicate, all point towards system crimes. “While it has not always been possible to establish the identity of those responsible for these serious alleged violations, these findings demonstrate that there are reasonable grounds to believe that gross violations of international human rights law, serious violations of international humanitarian law and international crimes were committed by all parties during the period under investigation.” Indeed, said the report, if established before a court of law, many of these allegations may amount, depending on the circumstances, to war crimes, if a nexus is established with the armed conflict, and/or crimes against humanity, if committed as part of a widespread or systematic attack against a civilian population. In some of these cases, the alleged acts were apparently committed on discriminatory grounds. On the basis of the information obtained by OISL, there are reasonable grounds to believe the Sri Lankan security forces and paramilitary groups associated with them were implicated in unlawful killings carried out in a widespread manner against civilians and other protected persons. Tamil politicians, humanitarian workers and journalists were particularly targeted during certain periods, but ordinary civilians were also among the victims. OISL also gathered information that gives reasonable grounds to believe that the LTTE also unlawfully killed Tamil, Muslim and Sinhalese civilians perceived to hold sympathies contrary to the LTTE. The LTTE targeted rival Tamil political parties, suspected informers and dissenting Tamils including political figures, public officials and academics, as well as members of rival paramilitary groups. “Civilians were among the many killed or injured by LTTE indiscriminate suicide bombings and claymore mine attacks. Depending on the circumstances, if confirmed by a court of law, these may amount to war crimes and or crimes against humanity.” OISL also investigated allegations of extrajudicial executions of identified LTTE cadres and unidentified individuals on or around 18 May 2009, some of who were known to have surrendered to the Sri Lankan military. According to the report, OISL documented long-standing patterns of arbitrary arrest and detention by Government security forces, as well as abductions by paramilitary organisations linked to them, which often reportedly led to enforced disappearances and extrajudicial killings. During the course of its investigation, OISL reviewed reliable information on hundreds of cases of enforced disappearances that occurred within the period of its mandate in various parts of the country, with particular prevalence in the Northern and Eastern Provinces. Furthermore, the mass detention regime after the end of hostilities also led to enforced disappearances. “On the basis of the information available, OISL has reasonable grounds to believe that the Sri Lankan authorities have, in a widespread and systematic manner, deprived a considerable number of victims of their liberty, and then refused to acknowledge the deprivation of liberty or concealed the fate and whereabouts of the disappeared person. This, in effect, removed these persons from the protection of the law and placed them at serious risk.” OISL documented brutal use of torture by the Sri Lankan security forces, particularly in the immediate aftermath of the armed conflict when former LTTE members and civilians were detained en masse. This followed similar patterns by a range of security forces in multiple facilities, including army camps, police stations and “rehabilitation camps”, as well as secret, unidentified locations. On the basis of the information obtained by OISL, there are reasonable grounds to believe that acts of torture were committed on a widespread or systematic scale. “This breaches the absolute prohibition of torture, and Sri Lanka’s international treaty and customary obligations. If established before a court of law, these acts of torture may, depending on the circumstances, amount to crimes against humanity and/or war crimes.” The information gathered by OISL also provides reasonable grounds to believe that rape and other forms of sexual violence by security forces personnel was widespread against both male and female detainees, particularly in the aftermath of the armed conflict. The patterns of sexual violence appear to have been a deliberate means of torture to extract information and to humiliate and punish persons who were presumed to have some link to the LTTE. Due notably to the fear of reprisals, the stigma and trauma attached, and the other constraints its investigation faced, OISL said it was not able to fully assess the scale of the sexual violence used against those detained. Nevertheless, based on the information it has gathered, OISL considers there are reasonable grounds to believe that violations of international human rights law and international humanitarian law related to sexual violence have been committed by the Government security forces, and that some of these acts may amount to war crimes and crimes against humanity. OISL gathered information indicating a pattern of abductions leading to forced recruitment of adults by the LTTE until 2009. The forced recruits were obliged to perform both military and support functions and were often denied contact with their families. Towards the end of the conflict, the abductions leading to forced recruitment became more prevalent. Victims and families who tried to resist were physically mistreated, harassed and threatened. OISL observed that abductions leading to forced recruitment and forced labour were in contravention of Common Article 3 of the Geneva Conventions and of the LTTE’s obligations under international humanitarian law to treat humanely persons taking no direct part in hostilities as well as those placed hors de combat. The report said that if established by a court of law, these violations may amount, depending on the circumstances, to war crimes and/or crimes against humanity. OISL documented extensive recruitment and use of children in armed conflict by the LTTE over many years, which intensified during the last few months of the conflict, including increased reports involving children under 15. “This was in violation of the Convention on the Rights of the Child (CRC) and its Optional Protocol on the involvement of children in armed conflict, and could also constitute war crimes if proven in a court of law.” On the basis of the information in OISL’s possession, there are reasonable grounds to believe that many of the attacks reviewed in this report did not comply with the principles on the conduct of hostilities, notably the principle of distinction. OISL found the Government of Sri Lanka placed considerable restrictions on freedom of movement of humanitarian personnel and on humanitarian activities in the Vanni (in the Northern province). “These restrictions impacted on the capacity of humanitarian organizations and personnel to effectively exercise their functions and ensure access to relief of civilians in need. Such restrictions may only be justified by imperative military necessity.” There are reasonable grounds to believe that the LTTE also failed to respect its obligations to respect and protect humanitarian relief personnel and not to restrict their freedom of movement. The report noted that the new Government has pledged to deal with accountability issues “within the country’s legal framework.” “The commitment by the new Government to pursue accountability through a domestic process is commendable, particularly in a context where some political parties and sections of the military and society remain deeply opposed,” it said. But the unfortunate reality is that Sri Lanka’s criminal justice system is not yet ready or equipped to conduct the “independent and credible investigation” into the allegations contained in the OISL report, or “to hold accountable those responsible for such violations”, as requested by the Human Rights Council. First and foremost is the absence of any reliable system for victim and witness protection, particularly in a context where the threat of reprisals is very high. Second is the inadequacy of Sri Lanka’s domestic legal framework to deal with international crimes of this magnitude. The High Commissioner believes that the Government will need to embark on fundamental reforms of the security sector and justice system, including a fully-fledged vetting process to remove from office security forces personnel and public officials suspected of involvement in human rights violations, before it can hope to achieve a credible domestic accountability process and hope to achieve reconciliation. He remains convinced that for accountability to be achieved in Sri Lanka, it will require more than a domestic mechanism. “Sri Lanka should draw on the lessons learnt and good practices of other countries that have succeeded with hybrid special courts, integrating international judges, prosecutors, lawyers and investigators. Such a mechanism will be essential to give confidence to all Sri Lankans, in particular the victims, in the independence and impartiality of the process, particularly given the politicization and highly polarized environment in Sri Lanka.” The report, amongst others, called on the Government of Sri Lanka to adopt a specific legislation establishing an ad hoc hybrid special court, integrating international judges, prosecutors, lawyers and investigators, mandated to try war crimes and crimes against humanity, with its own independent investigative and prosecuting organ, defense office and witness and victims protection program, and resource it so that it can promptly and effectively try those responsible. Meanwhile, in a response to the OISL report, the Ministry of Foreign Affairs of Sri Lanka said that the Government of Sri Lanka is pleased and encouraged by the High Commissioner’s recognition of the efforts of the new Government since the Presidential election of 8 January 2015 in dealing with issues of concern for the people of Sri Lanka relating to human rights, rule of law, governance, justice, institutional and legal reform and reconciliation. It appreciated the due recognition given to the Government’s constructive engagement with the High Commissioner and OHCHR aimed at addressing post-conflict issues that impact on achieving reconciliation. It took note of the report of the OHCHR investigation on Sri Lanka, recognising fully that this report represents a human rights investigation and not a criminal investigation, and will ensure that its contents as well as recommendations receive due attention of the relevant authorities including the new mechanisms that are envisaged to be set up. +
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