In December 2016 Morocco and Nigeria signed a new bilateral investment treaty (“BIT”) with the objective of promoting and protecting “co-operation between the Parties in order to facilitate and encourage mutual investment” (Article 2).
This new treaty is part of a new generation of BITs, which are more in line with the developments of international law. This comes as a response to the criticism over the past few years, which highlighted issues such as unbalanced content, restrictions on regulatory powers as well as other inadequacies of investment arbitration. This article will address the most relevant provisions put forward by this “new generation” BIT.
Article 4 of the BIT establishes a Joint Committee composed of representatives from both Parties, who shall have the general duty of overseeing the administration of the agreement. This includes the following responsibilities:
a. Monitor the implementation and execution of the BIT;
b. Debate and share opportunities for the expansion of mutual investment;
c. Involve the participation of private sectors and civil society on specific issues regarding the work of the Committee;
d. Seek to resolve any issues or disputes regarding the investment of the Parties in an amicable manner.
Standards of Protection
The protection standards provided by the BIT are similar to what would traditionally be contained in a BIT. Article 6(3) notes that national treatment standards apply and provides for a non-exhaustive list of circumstances when such protection will be employed. Furthermore, Article 7(1) guarantees the minimum standard of treatment, in line with customary international law. The same article also makes reference to fair and equitable treatment, noting that this includes “the obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal system of a Party”. Finally, the last sentence mentions “full protection and security”, which “requires each Party to provide the level of police protection required under customary international law”. Overall, both fair and equitable treatment as well as full protection and security will not afford investors any additional protection, beyond the minimum standard provided.
Article 26 of the BIT deals with “dispute prevention” considerations. One noteworthy provision is listed in the first paragraph of Article 26, which requires parties to assess their dispute through consultations and negotiations by the Joint Committee before initiating arbitral proceedings. Even though this first paragraph refers only to the “Parties” (i.e. the signatory States) the following provisions seem to clarify that the assessment requirement also applies between investors and States. In essence, according to Article 26, if the dispute is not resolved within six months from the date of the written consultation and negotiation, the investor will have to exhaust the local remedies of the domestic courts and only after such steps have been taken, will they be able to initiate arbitral proceedings.
It seems that the proposed mechanism for dispute resolution may raise some concerns. Firstly, all the prescribed steps that parties have to take before initiating arbitration may result in making the process more time consuming. Secondly, the power to actually refer the disputes to the committee pertains to the State exclusively and seems to be discretionary. Therefore, certain issues might arise with regard to the judicial sovereignty of the host State, as sometimes, the referral process may depend on the relationship between the investor and the home State.
The actual arbitration provisions are not different from other BITs. Article 27 provides for investor-State disputes to be resolved under ICISD or UNCITRAL or a different institution chosen by the parties. The BIT also contains provisions for consolidation of proceedings, however not much detail is provided. Article 29 refers to proceedings which “have a question of law or fact in common and arise out of the same events or circumstances”. This procedure is to be agreed, again, through the Joint Committee.
Finally, a novel provision of the BIT is contained in Article 20 and refers to the investors’ liability. This article provides for civil actions for liability in the judicial process of the investors’ home States, should the investor fail to adhere to their obligations. However, at this stage there is an element of uncertainty regarding who can bring an action against the investor and to what extent.
The BIT supports the move towards a “new generation” of agreements between the States and it seems to represent a change in approach in particular for Morocco. Through these new provisions, both States have shown that the BIT can afford investors solid protection without compromising the rights of the host State. In terms of its procedural aspects, both the presence of a Joint Committee and the liability provisions are novel. It therefore remains to be seen how they will unfold in practice.