LONDON (CU)_The Commonwealth Secretariat recently published a new guide to help countries maximise benefits of foreign investment contracts while avoiding damaging consequences.
According to the agency, although investment contracts between states and foreign investors can assist countries in meeting Sustainable Development Goals, however, these relationships often lack fairness and balance. This may trigger disputes which could lead to large financial losses that has to be shouldered by the people in the host state, the Secretariat noted.
Accordingly, the new guide aims to maximise gains and minimise the costs to governments and citizens by focusing on economic development, social and environmental matters. It is designed to provide direction to all government lawyers in the Commonwealth and any other parties involved in drafting, negotiating and reviewing contracts for large scale projects.
The guide was launched during a webinar held on Tuesday (6 April) during which Co-author Motoko Aizawa, President of the Observatory for Sustainable Infrastructure, expressed her gratitude towards the Commonwealth Secretariat for spearheading the initiative.
“One of the things that really surprised us is how little there is out there on this topic. Whether we’re talking about practical guidance, or academic or empirical studies, we found very little on this topic and so we hope that this resource can be helpful to everybody,” she said.
Co-author Howard Mann, a leading international lawyer specialised in international investment law and arbitration, highlighted the importance of prioritising domestic laws of the host state in relationships between states and investors.
“Otherwise you end up in a negotiation that essentially creates a bespoke legal regime for each investment and that is really the antithesis of any notion of the rule of law applying equally to all investors and businesses,” he noted.
The project to create this new guide was led by the Commonwealth Secretariat’s Office for Criminal and Civil Justice Reform (OCCJR), following consultation with government lawyers of Commonwealth countries who highlighted the need for such a resource.
According to Francisca Pretorius, Adviser and Head of the OCCJR, the guide is an important resource for contracting parties to minimise harm and maximise benefits to the host state, people and the environment.
It includes guidance on incorporating human rights obligations and climate change provisions, two areas which were recognised by the authors as not being mentioned in 120 contracts spanning 30 countries during their research.
Matthew Moorhead, Legal Adviser in OCCJR who led the project, said the group wants to ensure this new guide is on the desk of every government lawyer in the Commonwealth who needs it.
