The 11th Annual Forum of Developing Countries Investment Negotiators Nairobi, Wednesday, 7th February 2018
Welcome Talking Notes By Dr. Chris Kiptoo, CBS, Principal Secretary For International Trade at The 11th Annual Forum of Developing Countries Investment Negotiators Nairobi, Wednesday, 7th February 2018, 9:30am at Intercontinental Hotel, Nairobi.
- Mr. Davaasuren Damdinsuren, State Secretary, Ministry of Foreign Affairs, Mongolia
- Ms. Nathalie Bernasconi, Group Director, Economic Law and Policy, International Institute for Sustainable Development
- Dr. Moses Ikiara, Managing Director, Kenya Investment Authority
- The 11th Annual Forum of Developing Country Investment Negotiators, co-organised by the International Institute for Sustainable Development, Kenya Investment Authority and South Centre has attracted over 130 government representatives from more than 70 countries who will be discussing how to design better trade and investment treaties and avoid crippling arbitrations.
- Kenya has been an active participant in the Forum for many years and we are delighted to host our colleagues at this important conference.
- The Forum comes at a time when foreign investors are filing an increasing number of costly disputes against governments, often for policy decisions relating to environmental protection, public health, taxation or stakeholder engagement aimed at preventing conflict associated with displacements caused by large land purchases and mining projects. Kenya has not been spared, there are ongoing cases at ICSID with claims amounting to Kshs.334bn!
- It is critical to point out that we can only achieve development goals through concerted domestic, regional and international action. The deliberations at this Forum by developing countries therefore underpin the need and importance to have their voices heard in international processes, such as in UNCITRAL and at UNCTAD where discussions are taking place about what to do with the existing stock of treaties.
- Kenya is actively involved in bilateral and multilateral treaty negotiations with various countries. However, we have seen how vague language in investment treaties can result in massive payouts. That’s why, spearheaded by the National Treasury, we are developing a model investment treaty and an investment agreements policy with clear rules and responsibilities.
- The policy has proposed the establishment of an early alert and tracking mechanism designed to identify and track at-risk investments, this way, it will attempt to alleviate the challenges investors face, and the options to escalate cases to international arbitration.
- It provides for an institutional framework that fosters coordination in investment agreements negotiations, this is in line with the trade policy’s constitution of a trade negotiating council.
- A blue paper and a white paper will be prepared annually on the state of play in the national, regional and international investment policy and agreements arena to advice on necessary reforms post ante.
- It also proposes a review of the existing treaty network in line with “best practice”, exposure, effectiveness and relevance, including conducting periodic performance reviews of, inter alia, all bilateral, plulirateral and multilateral investment agreements to which Kenya is a party.
- Kenya has played a critical role in the reform process of the investment agreement policies in the region. Model investment treaties have been developed in the AU, COMESA and EAC. The formulations include provisions safeguarding the right to regulate, right to pursue development goals, exclusions of umbrella clauses, including for sustainable development objectives, and carve outs and provisions aimed at minimizing exposure to investment arbitration.
- The models include provisions on compliance with domestic laws reinforcing the fact that the treaties do not change the states’ right to regulate. Likewise, provisions of exclusions from the treaty for measures taken to promote development within host states have been made. These ensure that performance requirements may be imposed by states on foreign investors to promote the social and economic benefits of their investment. It is important to mention that the treaties have provisions that include various investor obligations, such as corruption, environmental protection, human rights, public health, etc.
- In light of the reforms happening, this forum will be key in discussing approaches in trade and investment treaties that attract investment that contributes to the domestic economy by creating jobs and building knowledge while respecting the environment,
- There is need for both the government and the investors to abide by the laws and rules and act responsibly.
- The forum comes at an important time when developing countries need to participate in the reform of investor-state dispute settlement and finding new alternatives so as to avoid a freeze in legitimate government actions due to risks and fear of arbitration even when measures are adopted in the public interest.
- Forum is thus an ideal platform for developing and emerging economies to come to a joint position and sharing experiences on the way forward for reform.
Dr. Chris Kiptoo