Dr. Wolfgang Alschner, Assistant Professor at the University of Ottawa, is an empirical legal scholar specialized in international economic law and the computational analysis of law. He holds a PhD in International Law from the Graduate Institute of International and Development Studies in Geneva, a Master of Law from Stanford Law School, a Master in International Affairs from the Graduate Institute as well as an LLB from the University of London and a BA in International Relations from the University of Dresden, Germany. Prior to joining academia, he worked for UNCTAD’s Section on International Investment Agreements. He co-founded the investment treaty analytics portal www. mappinginvestmenttreaties.com and has published in leading peer-reviewed journals.
1. You have developed a tool to assess the consistency of a country’s BIT network and examine the similarities between individual treaties on the website mappinginvestmenttreaties.com. Given how complex the IIA regime is today, what lessons can the stakeholders draw from such empirical analysis?
For the past two years, my colleague Dmitriy Skougarevskiy and I have been exploring different ways in which techniques from computer science can help reduce investment law’s complexity. Our goal was to expose and visualize latent design differences in more than 2000 treaties in order to assist stakeholders and researchers in navigating the BIT universe more effectively. There are a number of ways in which these stakeholders can take very practical advantage of our research and online tools. For instance, our approach enables policy makers to spot inconsistencies between agreements in a country’s treaty network pointing them to those treaties that should be terminated or renegotiated. That is especially important for countries seeking to reduce their exposure to investment claims by changing treaties that are overly protective of foreign investors. Alternatively, our website also allows users to trace trends and innovations in treaty making. So-called umbrella clauses, for example, are falling into growing disuse whereas general public policy exceptions are increasingly popular. Finally, our work also offers negotiators the opportunity to identify a common ground between the investment policies of different states in order to scope the potential for regional or multilateral consolidation. In short, our research offers very hands-on guidance for countries on how to renegotiate past agreements and negotiate future ones.
2. Many countries, especially economies in transition, are allegedly closing themselves up to the current Investor-State Dispute Settlement (ISDS) regime by either rejecting the system or drafting BITs in a manner that preserves their right to regulate in accordance with their national policy interests. What are your views on it? Do you think the current ISDS regime needs reforms?
Yes, countries, including economies in transition, are beginning to revise their international investment policies. In my view, that is a good thing. Our research has shown that, for a long time, Northern states were the dominant investment rule makers while Southern states were passive rule takers. Today, that is beginning to change as treaty design innovation takes place in both the North and the South. That has enriched the global debate over the future of the ISDS regime and has diversified its reform options. This diversity of options is crucial, in my view, as we have to think creatively about investment law’s future. The justifications for why we need investment treaties are likely to be different today than they were three decades ago. I think we should spend more time thinking about what exactly these agreements are supposed to achieve in today’s world and, on that basis, build on established practice where it is warranted and depart from it where it is needed. Economies in transition can play an essential role as emerging norm entrepreneurs in this process.
3. What impact would trade agreements like TPP, TTIP and RCEP have on the current BIT in general? How can the countries manage the overlap between such regional treaties and existing bilateral treaties?
Unfortunately, most regional investment agreements merely make the spaghetti bowl of agreements more complex by adding another layer of regional rules on top of bilateral ones that continue to exist. Often that creates loopholes for creative lawyers to circumvent innovation. Take the TPP carve-out that allows states to prevent claims from tobacco companies for example. As long as parallel treaties without such a carve-out are left in place, tobacco companies can continue to file claims under parallel BITs. Policy makers need to prevent such treaty shopping so as to ensure that regionalism reduces rather than exacerbates current complexities. Aside from phasing out overlapping and outdated bilateral treaties, we should also start asking whether we need different investment rules for different countries in the first place. If investment agreements are about ensuring non-discrimination and a basic level of due process and good governance, then a single instrument that sets a common floor of investment protection would do the trick. Such a multilateral investment treaty would replace the multitude of diverging regional or bilateral arrangements drastically reducing the complexity currently characterizing the investment regime.
4. Recently, a representative of the government of Pakistan suggested expanding the scope of the World Trade Organisation “to include investment disputes through the negotiations process”. What are your views on this suggestion?
Investment is already part of the WTO architecture. The GATS under mode 3 covers investment in services, TRIPS protects investments in the form of intellectual property rights and TRIMs explicitly deals with trade-related investment measures. In that sense, the WTO is a natural host for negotiations and dispute settlement on investment. At the same time, WTO dispute settlement is interstate whereas most investment disputes concern a private investor and a host state. To successfully integrate investment dispute settlement into the WTO a hybrid structure would thus be required that allocates some disputes to the interstate realm and some to investor-state dispute settlement either before national or international adjudicators. Creative thinking is needed to design such an architecture. In any event, within or outside the WTO, investment dispute resolution merits a stronger interstate dimension. Individualized dispute resolution is neither just nor efficient when the interests of many states or investors are affected as was the case, for instance, in the wake of Argentina’s financial crisis. Such disputes of a more systematic nature should be resolved through interstate dispute settlement rather than ISDS.
5. In the recent Philip Morris dispute, Philip Morris invoked the ‘umbrella clause’ to argue that Australia breached its obligations under the TRIPS Agreement and the TBT Agreement. Do you think there is a growing convergence of international trade and Investment Arbitration?
There is certainly more interaction between the trade and investment regimes. Trade and investment transactions are increasingly intertwined through global value chains. Lawyers use trade and investment dispute settlement strategically and in combination to challenge taxes on sweeteners, trade remedies on softwood lumber or measures for tobacco control. These new fields of interaction open the doors for increased inter-regime dialogue, borrowing and learning. But I don’t think that this interaction will necessarily lead to convergence as important architectural differences remain between the two regimes. In the future, states may show more willingness to consider trade and investment as two sides of the same coin. Then, perhaps, we will see interaction translate into greater institutional convergence.