It is essentially an International Tribunal which settles
disputes between foreign investors and nation states. Its charter is
unequivocally to serve the interests of foreign investors and it does not take
into consideration factors such as human rights nor the environment.
There are some international rules but it is also governed
by the various treaties and free trade agreements between countries. This means
that the rules will be different for investors from different countries
depending on what treaties are signed with their home countries.
Most of the time the countries which find themselves before
these tribunals are developing countries from Africa, Asia Central and Eastern
Europe, South America and Asia with some countries appearing multiple times.
Modern developed economies are rarely called to appear although I did see one
case against NZ which was settled by arbitration and there was one case against
the US.
The costs of appearing are enormous and the fines imposed
against countries found to have breached conventions against foreign investors
are into the $US100m range.
There are protections against obvious things such as
nationalisation and acquisition of property without compensation. Provision of
security is covered which could explain why security forces are used so often
(sometimes brutally) to clear indigenous populations from logging, mining and
farming concessions and (perhaps surprisingly) game parks run by conservation
organisations.
International Investment Agreements (IIA) usually impose few
obligations on investors but host countries commonly have many obligations. For
example they are required to ensure that businesses have the resources to
operate.
In reality this means that for an agricultural enterprise
for example, water must be provided. This is the case even if local people and
crops are perishing.
It is also commonplace in international agreements that an
investor is able to operate their business in accordance with their own needs
so that even in a time of famine restricting the export of food by a foreign
investor may be a breach of international law.
One would hope that a
country like Australia has managed to reserve for itself adherence to local
laws covering things such as water (where entitlement is often reduced during a
drought or to preserve an aquifer) and export where rules for many commodities
such as beef are very strict and have evolved over time as a matter of
necessity.
However the notes on a
case of a US company seeking compensation for expropriated land offer some
insight.
The Tribunal is satisfied that the rules and principles
of Costa Rican law which it must take into account, relating
to the
appraisal and valuation of expropriated property, are
generally consistent
with the accepted principles of public international law on
the same subject. To the extent that there may be any
inconsistency
between the two bodies of law, the rules of public
international law
must prevail. Were this not so in relation to takings of
property,
the protection of international law would be denied to the
foreign
investor and the purpose of the ICSID Convention would, in
this
respect, be frustrated.
I
would like to speculate now on attitudes to movements such as Lock the Gate.
Governments are particularly sensitive to these movements and the degree of
support they have enjoyed.
From
a government perspective though, foreign companies have been guaranteed access
to their resource and recent legislation which allows CSG companies unlimited
access to the water they require. If they cannot provide this, the question is,
“Where does this leave us internationally?”
To
move a little further down the track, companies would also have been
guaranteed, before making sizable investments, that they would have the means
to export their product. It appears that in order to fulfil that promise in any
sort of a timeframe the ecology of places such as Gladstone Harbour will
continue to be sacrificed. The fishers of the Harbour are simply caught in the
crossfire.
Whether
the foreign investment is industrial mining, farming or logging in most
countries in the world where secure property rights are not clear and even in
some places where they are clear local people are mostly collateral damage.
In
many forests around the world the traditional inhabitants rarely have title. In
Australia, farmers have title to the land but not the resources, nor, it
appears, the water underneath.
The
question remains, “What compromises will we need to make when we do start to
welcome large foreign investors in our farming and grazing lands?”
Green
groups and others recently have been asking government if they are able to put
a stop to CSG projects if they are shown to be causing environmental or massive
environmental damage (there may be a difference legally).
There
is no doubt that advanced economies go out of their way to maintain their
credentials as secure places to invest.
Where
does this leave us with an industry that has been hastily rolled out?
