1. The Few Model BITs that Comprise PRPs, as Well as the PRPs of Pioneering IIAs, Have Proven Extremely Influential
PRPs appear only in a handful of Model BITs. Based on the Model BITs made available by
99 Carstens (n 11) 229. 100 ibid. 101 ibid 229, 232-233. 102 ibid. 103 ibid.
104 ibid 233-234; see Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt,
Advisory Opinion, I.C.J. Reports 1980, Separate Opinion of Judge Ago, 160, 162 quoted in Carstens (n 11) 242.
UNCTAD,105 the Model BITs of only six countries (out of 44)106 and one NGO107 comprise PRPs. The Model BITs of one NGO108 and two IGOs109 reject PRPs. Nevertheless, as will be discussed in greater detail below, some of the few Model BITs to comprise PRPs, especially those of Canada, France and the United States, as well as Article 1106 of the NAFTA (1992) and Article V(2) of the Canada - Ukraine FIPA (1994) have been extremely influential in the development and spread of PRPs in IIAs and multiple instances of transplanted PRPs can be identified. Negotiating BITs on the basis of a model BIT is reminiscent of transplantation, with the difference that the source rule of a PRP included in such a BIT could be traced back to the PRP of a model BIT.110
2. The U.S. BIT Programme, Spearhead of PRPs
This section shows that the U.S. BIT Programme was meant to create new rules of international law and to influence its development, and that to this end, the United States deliberately attempted to sign uniform BITs. The U.S. BIT Programme proved highly influential for the development of PRPs in IIAs. While France also included its own distinct type of PRPs in its BITs starting in the early 1980s, the French approach to PRPs did not repeat itself among surveyed IIAs beyond French IIAs. By comparison, many PRPs in IIAs, both American and non- American, find their origins in pre-existing PRPs from prior American IIAs or Model BITs.
a) The U.S. BIT Programme Created and Exerted a Profound Influence on International Law
The contribution of American outward FDI to American exports legitimised the interest in investment matters of the United States Trade Representative (“USTR”) who exercised oversight jurisdiction over the U.S. BIT Programme from its very beginnings.111 The USTR
105 UNCTAD (n 24).
106 Canada Model FIPA (2004); Canada Model FIPA (2012, revised in 2014); France Model BIT (1998);
France Model BIT (undated); Italy Model BIT (2003); Kenya Model BIT (2003); Norway Draft Model BIT (2007); Norway Draft Model BIT (2015); U.S. Model BIT (1994); U.S. Model BIT (1998); U.S. Model BIT (2004); U.S. Model BIT (2012).
107 Consumer Unity & Trust Society (“CUTS”), Centre for International Trade, Economics and
Environment, “International Agreement on Investment” in Multilateralisation of Sovereignty--Proposals for Multilateral Frameworks for Investment, Annex (CUTS, June 1998) 85-119.
108 Asian-African Legal Consultative Committee (“AALCC”), “Asian-african Legal Consultative Committee
Revised Draft of Model Agreements for Promotion and Protection of Investments” in Models for Bilateral Agreements on Promotion and Protection of Investments: Report of the Committee (AALCC, 1985) Article 3(ii) of Model B.
109 Caribbean Community Secretariat, Guidelines for use in the Negotiation of Bilateral Treaties (1984);
Southern African Development Community, SADC Model Bilateral Investment Treaty Template with Commentary (2012), Articles 20 and 21.
110 Carstens (n 11) 232.
completed the first version of a U.S. Model BIT in December 1981, announced it in January 1982 and which came in handy as soon as January 1982 when BIT negotiations were launched in earnest.112 The United States developed multiple Model BITs in quick succession, especially in the early years of the U.S. BIT Programme, in response to a constant feedback loop provided by unfolding BIT negotiations from the 1980s onward: American Model BITs were produced in 1983, 1984, 1987, 1991, 1994, 2004113 and 2012.114 The United States began referring to the PRP as a “core provision” of its BITs in the course of signing American BITs from the end of the 1980s onward.115 For instance, the submittal letter accompanying the Sri Lanka - U.S. BIT enumerated six main objectives of BITs, adding as second objective freedom from performance requirements.116 The United States considered PRPs as one of “six basic guarantees” within its BITs.117 The United States confirmed that PRPs constituted a key objective of its BIT Programme and made it clear that it sought to include PRPs in all of its BITs.118
American BITs were negotiated in three waves: first, from 1980-1982 to 1986, second from 1989 to 1999, and third from 2004 onward, when FTAs with investment chapters became the norm and BITs the exception.119 American BITs included PRPs from their inception; PRPs followed a curve of increasing complexity via exceptions and increasing detail.120 The U.S. BIT Programme primarily aimed at creating a body of State practice that supported, reaffirmed and amplified American views on the protection of foreign investment under international law,121 that locked-in key host countries, and that contributed to bringing about a “pro-investment consensus” which would reverberate notably on the GATT Uruguay Round of negotiations and
112 Bale (n 93) 20-21; K. Scott Gudgeon, ‘‘United States Bilateral Investment Treaties: Comments on
Their Origin, Purposes, and General Treatment Standards’’ 4 Int’l Tax & Bus. Law 105 (1986) 105-106 and fn 4; Kathleen Kunzer, “Developing a Model Bilateral Investment Treaty” 15 Law & Pol'y Int'l Bus. 273 (1983) 273; Robin (n 48) 933; Kenneth J. Vandevelde, “The Bilateral Investment Treaty Program of the United States” 21 Cornell Int'l L.J. 201 (1988) 210; Kenneth J. Vandevelde, “U.S. Bilateral Investment Treaties: The Second Wave” 14 Mich. J. Int'l L. 621 (1992-1993) 626-627; Vandevelde (n 84) 1-2.
113 Vandevelde (n 84) 2.
114 See U.S. State Dept., “Bilateral Investment Treaties and Related Agreements,” online:
<http://www.state.gov/e/eb/ifd/bit/index.htm>, accessed 1 January 2017.
115 Vandevelde (n 84) 4. 116 Vandevelde (n 84) 52-53.
117 “Statement by Sen. Thompson” in 1995 U.S. Senate Hearings on BITs (n 74) 1; U.S. Senate
Committee on Foreign Relations, Executive Report 106-23 Recommending Advice and Consent to the Ratification of the Bilateral Investment Treaties With Azerbaijan, Bahrain, Bolivia, Croatia, El Salvador, Honduras, Jordan, Lithuania, Mozambique, Uzbekistan and a Protocol Amending the Bilateral Investment
Treaty With Panama, 106th Cong., 2nd Sess. (4 October 2000) 16; Bay (n 94) 47.
118 “U.S. State Dept. Responses to Sen. Pell” (n 78) 16, 40. 119 Vandevelde (n 84) 30-31.
120 ibid 4.
121 McAllister (1988) (n 89) 5; “U.S. State Dept. Responses to Sen. Pell” (n 78) 15, 17, 21, 33; Tarullo
(1995) (n 74) 7; Price (n 92) 31; Papovich (n 94) 73; Deluca (n 29) 261-262, 265-269; Gudgeon (n 112) 133-135; Lang (n 94) 457; Sachs (n 72) 195, 211; Vandevelde, “U.S. BIT Program” (n 112) 210, 212; Vandevelde (n 84) 31, 34-35, 68.
on NAFTA negotiations.
b) The U.S. BIT Programme Uncompromisingly Strove for a Uniform Outcome
The United States sought to avoid departures from the Model BIT and adopted an intransigent negotiating stance in the hope of creating a uniform body of State practice through its BITs.122 It entered into BITs only when the outcome would closely resemble its Model; few variations among BITs were anticipated when the United States began its implementation of the U.S. BIT Programme123 and the United States eventually concluded many BITs with very similar content.124 In order to ensure the greatest conformity possible between its BITs and its Model BITs and to leave the main text of the BIT unchanged, the United States would place clarifications, altering language and other departures from the Model BIT in protocols to BITs.125 Through their bilateral negotiations, the United States was “advocating global standards, not ad hoc standards for each country” and sought the same standards regardless of the signatory country.126
The United States rejected opting for greater flexibility in its U.S. Model BIT. It refused to prioritise provisions on dispute settlement, transfer of funds and expropriation while sacrificing rights of establishment and PRPs. The United States viewed all principles enshrined in its Model BIT (including its PRP) as crucial to fostering an attractive and secure investment climate for its outward FDI and to ensuring that outward FDI would be “free to flow to its most efficient use.”127 The United States were interested in negotiating BITs with States who would depart as little as possible from its Model.128
For example, the U.S. BITs with Congo (Brazzaville), Sri Lanka, and the Czech and Slovak Federal Republics adopted the PRP that appeared in the relevant U.S. Model BIT,129 and both the Grenada - U.S. BIT (1985) and the Congo (Brazzaville) - U.S. BIT (1990)130 were negotiated at lightning speed and simply integrated the relevant U.S. Model BIT unchanged. U.S. BITs signed with Eastern European countries and former Soviet republics followed the same trend.131 The consistent formulation of PRPs in American IIAs likely contributed to their growing
122 Vandevelde (n 84) 32.
123 Sachs (n 72) 193 fn 9; Vandevelde, “The U.S. BIT Program” (n 112) 212; Vandevelde (n 84) 1. 124 Price (n 92) 31.
125 “U.S. State Dept. Responses to Sen. Pell” (n 78) 32. 126 “U.S. State Dept. Responses to Sen. Pell” (n 78) 31-32. 127 “U.S. State Dept. Responses to Sen. Pell” (n 78) 28.
128 See Tarullo (1992) (n 74) 10; “U.S. State Dept. Responses to Sen. Pell” (n 78) 23, 26. 129 “U.S. State Dept. Responses to Sen. Pell” (n 78) 40.
130 “Statement of Kenneth J. Vandevelde” in 1992 U.S. Senate Hearings on BITs (n 74) 69. 131 ibid 68-73.
influence.