Chapter 4 analyses the new Brazilian investment agreement against the backdrop of the mosaic of international investment treaties in the region. Several Latin American countries have been signatories to investment treaties and protagonists in investment disputes. Nevertheless, the authors note, the biggest economy in Latin America does not fit such profile. Although Brazil signed 14 bilateral investment treaties in the 90s, it has never ratified a single one. Be that as it may, such position has never hindered the injection of foreign investments into Brazil. However, the authors argue, the scenario has now changed. In the courtyard of multinationals, Brazilian companies unmistakably have their share and are seeking protection to their international investments. But rather than jumping on the bandwagon of existing BIT regulations, Brazil chose to go down a different path. Since 2015, it has signed eight international investment agreements called Cooperation and Facilitation Investment Agreements. In the new approach, Brazil is seeking to balance investor protection with state regulatory powers. The Brazilian model is structured under three main pillars: investment cooperation and facilitation; improved institutional governance; and risk mitigation, with dispute prevention and settlement. Although this structure is not entirely new to international investment agreements, it brought new components to its content, limiting the rights of the investor towards a primarily diplomatic dispute resolution mechanism compared to most common Latin American BITs. Therefore, from the evaluation of the Brazilian investment agreement, Chapter 4 assesses whether the Brazilian model can serve as a model for other Latin American countries.
Chapter 2 addresses the current South American mosaic of states. Drawing on the theory of international regimes, Chapter 2 develops a typology that organizes states into four groups based upon the different behaviors which South American states have adopted in the last decades, towards the international investment regime and, precisely, towards the investor–state dispute settlement regime. As such, the typology categorizes states as members, states that are part of the regime and which have not substantially changed their attitude towards the regime (for instance, Argentina); confronters, namely, states that, without abandoning the international investment regime, came to adopt a different, more confrontational attitude towards it; outsider, to wit, the only state that has historically been located outside the regime (Brazil); and, dissidents, states that having been part of the regime withdrew from it (Bolivia, Ecuador, and Venezuela). Chapter 2 explores the positions of South American states regarding the investor–state dispute settlement regime, their basis and the reasons that led to its manifestations in the present. It argues that historically South America has moved from resistance to accommodation and from accommodation to fragmentation in relation to the regime created by the US and Europe, leading to a three-color mosaic – members, the outsider, and dissidents. The chapter concludes that, despite being an outsider, Brazil is the only state in the region that has already taken steps to reshape the traditional regime.
Claims to universality and charges of particularism
Chapter 1 provides a constructivist history of the great debate surrounding the Calvo doctrine, tracing the ways that jurists and diplomats invoked and attacked Calvo, and the ways participants sought to clothe their preferences in the language of universalism, while seeking to expose the particularist predilections of their rivals. This focus on the “historiographical Calvo,” as opposed to the “historical Calvo,” provides insight into the rhetorical strategies of the protagonists and antagonists of reformist projects in international law. This analysis of the “great debate” regarding the level of protection international law ought to offer foreign investors is structured by the transition between different institutional fora. Starting in 1889, the analysis begins with the first Pan-American Conference and concludes in 1965 with conclusion of the Convention establishing the International Centre for the Settlement of Investment Disputes. Unlike conventional accounts of the historical antecedents of what is, today, referred to as “international investment law,” Chapter 1 decenters the arbitral tribunal – the paradigmatic institution of modern investment law – from its ascribed place as the locus of legal development. Despite the indisputable importance of arbitral decisions, this chapter argues that the basic structure of arbitral dispute resolution predisposes historical accounts towards a depiction of Latin American “resistance” as a rear-guard action; ad-hoc, disaggregated, and reactive. Focusing on the advocacy of reform projects through collective institutional forums not only facilitates a more coherent history of those projects but offers greater utility in the context of the present volume on the contemporary prospects of Latin American resistance and accommodation.
Chapter 7 argues that multinational corporations are the most important vehicle of global trade and international investment in today’s globalized economy, which they help shape, and that they are a central actor in the development of international investment law. The chapter describes the corporate stakeholder and its characteristics, interests, and role in the international investment law regime in Latin America. It begins by discussing the characteristics of the corporate stakeholder as a participant in the regime and the emergence of new corporate stakeholders. It argues that the corporate stakeholder and its interests are much more nuanced and diverse than the traditional conception of hostility between multinational corporations and the other systemic actors would suggest. The chapter adopts the perspective of the multinational enterprises towards international investment law and discusses whether, and if so, to what extent, corporations care about investment treaties and the availability of investor–state dispute resolution when making decisions on foreign direct investment. The author submits that corporations care generally about the protection of property rights and investment safety, which are objectives that can be secured by several means, not limited to bilateral investment treaties and investor–state dispute settlement. In the final section, the chapter discusses some of the ways in which corporations have accommodated the narratives promoted by other systemic actors and how these developments may contribute to norm creation in international investment law.
Transformative constitutionalism and fair and equitable treatment
María Angélica Prada-Uribe
Chapter 6 moves the focus away from governments and towards domestic courts to explain how the transformative constitutionalism – as developed by constitutional courts in the region and by the Inter-American Court of Human Rights – may act as a mechanism for resisting and shaping international investment law. In a carefully articulated case study, the authors show how transformative constitutionalism create substantive limits on the fair and equitable standard of treatment – and they explain the procedural venues (both domestic and international) through which such limits can be imposed. Chapter 6 describes the public/private divide in investment arbitration and its interaction with fair and equitable treatment as a platform for transforming the investment arbitration regime in a decentralized mechanism of international public power. The authors turn to the interaction between the Colombian constitutional jurisdiction and the investment regime, before suggesting that the discussion on the public–private divide of international investment arbitration is today more relevant than ever, as it is instrumental in defining the appropriate standard of domestic constitutional review to be applied vis-à-vis the international investment regime. A private law mindset of the international investment regime requires accommodation of the domestic legal system, while a public law mindset opens a door for resistance through a broader interaction between the national and the transnational spheres. In this last scenario, constitutional courts need to give precise orders to the executive branch regarding the standards or wording that needs to be modified in the investment treaties. By not doing so, the authors conclude, domestic Courts fail to create a dialogue between constitutional law and the investment regime which may foster a more democratic investment regime.
A critical approach to investment facilitation debate
Chapter 5 provides a critical approach to the investment facilitation debate, and throws light onto the different attitudes states manifest, often in international organizations, towards the model. In recent years, the author recalls, there have been many proposals for the reform of the investment protection regime, and one of such proposals entertain the adoption of investment facilitation rules. However, investment facilitation, as the author brilliantly explains, remains an indeterminate concept, whose objective is the simplification of all administrative procedures to allow the free entrance, development and exit of foreign investors from the host country. Investment facilitation encompasses three issues, namely, transparency and predictability, commitment with stakeholders, and regulatory cooperation. The centrality of regulatory cooperation connects to the notion of “good regulatory practices” pushed by the Organization for Economic Cooperation and Development. The author identifies a tension in the investment facilitation debate, especially between the concepts of “public policy space” on the road towards sustainable development proposed by the UNCTAD, and the notion of “good regulatory practices” of the OECD. Both categories can be considered as contradictory to the existence of sustainable foreign investment.
Chapter 10 argues that the relationship between investment and human rights represents a troublesome matter to the states, especially at international level, as governments must balance their compliance with international obligations under human rights instruments, with the protection of investors guaranteed by international investment agreements. Human rights and investment law are usually presented as opposing fields with colliding interests as well as contradictory rules and regulations. International investment agreements are usually characterized as a tool that favors businesses, which in turn, allow the special interests of foreign investor to triumph over any other public policy concern of host states. Some of the alleged threats posed by international investment agreements to human rights range from concerns regarding a “regulatory chill” effect when pursuing human right related policies, to the lack of transparency and legitimacy of the investor–state dispute settlement. Focusing on Latin America, the chapter argues that a human rights dimension can be recognized in international investment law. Furthermore, the authors claim that the evolution of international investment agreements is not necessarily in opposition with human rights protection, and that there are more connecting points rather than conflicting ones. The chapter shows that international investment agreements had introduced several protections already included in human rights instruments and have provided them with a mechanism that allows its enforceability.
The authors argue that international investment law does what it does by virtue of its ambivalent relationship towards universality. With a specific emphasis on Latin American legal thought and practice, the chapter shows how international investment law come to simultaneously accommodate claims of universality as well as resistance thereto. The authors explain how the sources metaphoric discourse enable the simultaneous vindication of both universality and resistance to universality. Then, they elaborate on how the enabling of an ambiguous engagement with universality came to inform the systematic use and espousal of the sources of international law in international legal thought and practice in Latin America. The attention turns to how this ambivalence manifests itself in the way in which the content is allocated to the concepts of international investment law like the international minimum standard and the standard of compensation. The chapter ends with a few concluding remarks on how such ambivalence towards universality is not accidental and makes the claim that resistance to universality is a form of cynicism at the service of universality itself.
International law, and in particular international investment law, has been shaped by the struggles of resistance between the diversity of material realities and worldviews within and beyond regions. Rather than a threat to the universality of international investment law, the diverse – sometimes clashing – approaches to, and interpretations of, international investment law, both from states and non-state actors, as well as scholars, has greatly contributed to the development of the field. In this regard, the Latin America and the Caribbean region has been a complex laboratory for the development of international investment law. On the one hand, some actors, such as non-governmental organizations, indigenous peoples, local communities, and of course governments, have remained true to the region’s tradition of resistance towards the international investment law regime that derives from investment treaties that follow the models that originate in the Europe-North America region. On the other hand, new actors such as corporations, international investment lawyers, and again governments, sought to accommodate said regime in the region. Consequently, a profusion of theories and doctrines – which, notably, come embedded in different, often clashing narratives – has emerged. This mosaic of clashing actors and narratives – too complex to be fully apprehended in this introduction and, alas, in this volume – has been resisting and accommodating the international investment law regime, as defined above, and has been Latin America’s major contribution to international investment law. In this introduction, we offer some initial thoughts about this mosaic, and about the forces of resistance and accommodation that emerge in it, to frame a debate that fourteen chapters will carry out.
Análisis desde una nueva perspectiva interdisciplinaria
Chapter 12 gives an account of the impact of international investments on the human right to water, which has been internationally recognized as an independent and positive human right since 2010, with the adoption of Resolution 64/292 of the United Nations General Assembly. However, the realization of this right has not been free of tension and contradictions, because factors such as the fragmentation of the international system, the different levels of development especially in the post-Cold War context, the rise of neoliberalism and the opening of markets, have led to a legal framework for international public development that favors the transnational private capital, and to a dispute resolution system that favors multinational corporations through international arbitration by institutions such as ICSID. The case of drinking water and sanitation, particularly in respect to Argentina, which the chapter discusses, illustrates the tensions and contradictions in the realization of the right. While UNGA Resolution 64/292 recognizes that access to drinking water in sufficient quantity and quality is a basic and universal human right, the international investment law regime jeopardizes the effectiveness of such recognition.