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Public debate about investment treaties often focuses on whether treaties are being well-interpreted in investor-state arbitration cases in accordance with governments’ intent. Governments at the OECD have considered the role governments can play in the interpretation of investment treaties through joint government interpretations and other forms of government “voice”.
Shared government interpretations of investment treaties are increasingly recognised as a way to help improve treaty interpretation. The 2001 joint interpretation of the NAFTA agreement by the three NAFTA governments has had a decisive influence on the interpretation of key aspects of that treaty. Along with Canada, Chile, Mexico, the United States and other governments, the European Commission has included in its treaties express provisions allowing for binding joint government interpretations of the treaty. Major recent treaties such as the TPP, the ACIA treaty between ASEAN members, CETA or the Pacific Alliance contain such provisions.
Intergovernmental discussions at the OECD have focused in particular on how joint interpretations might be used for the many existing treaties that do not expressly contemplate them. Vague provisions in many older treaties leave broad scope for interpretation. The existing treaty text may thus frequently allow sufficient scope to achieve a jointly-desired interpretation. A growing range of governments now perceive those treaties to be outdated.
Joint interpretations can be issued at any time and can be a simpler and faster device than renegotiation to address some aspects of treaty policy. They may also allow governments to address unwanted interpretations that could otherwise lead governments to consider terminating treaties. Discussions and exchanges of views with treaty partners about proposed joint interpretations in advance of treaty renewal dates can also help inform future negotiations and decisions about treaties.
At the same time, joint interpretations may be less certain in their effects than formal treaty amendments. It may also be difficult to achieve common views on particular issues and some governments may prefer the flexibility of making submissions as a non-disputing party in particular disputes rather than agreeing to joint interpretations. The evolving views of many governments about treaty policy may, however, provide new opportunities for joint interpretive agreements.
Joint interpretations can help treaties to achieve a better balance between stability and flexibility in order to provide a solid policy framework for investment decisions while allowing for adaptation to changing circumstances. They may help governments to better balance foreign investor protection and the right to regulate because it can be difficult to fully build this balance into treaties in advance. Joint interpretive agreements are also likely to be an increasingly important tool for ensuring that treaties are interpreted in accordance with the treaty parties’ intent and achieve their purposes. Such agreements could allow a substantial range of older treaties to be at least harmonised if not made identical in the short term.
A new OECD paper considers key questions such as the binding nature of joint interpretations or the scope for joint agreements in light of existing treaty language. It identifies a number of empirical and policy questions of interest. An earlier paper addresses the range of options for government voice with regard to investment treaties.
As part of its broad range of work on investment treaties, the OECD offers evidence-based analytical materials and a forum to governments for sustained exchanges on these issues. G20, OECD and other jurisdictions gather bi-annually to discuss investment treaty policy at an OECD-hosted inter-governmental investment roundtable known as the Freedom of Investment (FOI) Roundtable. Non-OECD countries including Brazil, People’s Republic of China, India, Indonesia and South Africa are actively involved. Since 2011, the FOI Roundtable has addressed investor-state dispute settlement (ISDS) and investment treaties at its regular meetings. Summaries of these discussions are available on the OECD website. In October 2015, the OECD launched a broader government-led dialogue about investment treaties.
The FOI Roundtable is addressing issues at the centre of public debate over investment treaties such as the quest for balance between investor protection and governments’ right to regulate, which will be the focus of the OECD’s annual conference on investment treaties on 14 March 2016. These conferences provide opportunities for governments to discuss their policies and work, and to exchange views with stakeholders and experts.
Article Compliments David Gaukrodger, Senior Legal Advisor, OECD Investment Division
