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Investors running wild on land: the threats posed by international investment agreements

Online Publication Date: 28 March 2013
A briefing note by Traidcraft, entitled ‘Investors running wild on land: the threats posed by international investment agreements’, discusses the impacts of the increasing number of investment agreements on developing economies.

Investment agreements, especially those between developed and developing countries, are often lopsided arrangements of various protections and rights to be enjoyed by foreign investors side-by-side with a restrictive set of prohibitions and limitations on the ability of governments to regulate investments and investor behaviour.

In particular, Traidcraft highlights the potential risks that the investor-state dispute (ISD) arbitration provisions contained in international investment agreements pose in relation to land development and tenure in developing countries.

ISD provisions allow foreign investors to take governments to private arbitration tribunals for breach of contract or treaty terms.

For this reason, the pitfalls that developing country governments should be aware of with regards to investment agreements are numerous, including:
•    Locking in place a deterrence mechanism (such as the threat of law suits, or financial compensation) against land reforms, if the latter involve government efforts to buy back or appropriate land that had already been leased or sold to foreign investors;
•    Entrenching rights for investors who may assert ‘breach of trust’ against a government that had, for example, changed its policy or a law in order to assert a matter of public interest;
•    Relegating domestic food security concerns as secondary when measured against the foreign investor’s right to dispose of the resources of the land as it sees fit (such as when a foreign investor insists on exporting its food products, while there is a need to restrict such exports due to a food shortage within the country); and
•    Claims for compensation following a change in a law or policy that a foreign investor can claim led to higher operation costs, thus affecting that investor’s investment negatively.  
For all the above reasons and more, Traidcraft calls for a reform of investment agreements to ensure they include a better balance of rights and obligations, and proposes a number of actions that can be taken towards that end.

To download the briefing note, please go to http://www.traidcraft.co.uk/Resources/Traidcraft/Documents/PDF/tx/Investment%20running%20wild%20on%20landJan13.pdf




 

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