Wednesday, September 19, 2012

Conference: Reframing the Investor-State Relationship: From Criticism to Constructive Engagement

The Seventh Columbia International Investment Conference will take place on November 14-15, 2012, in New York City. The theme is "Reframing the Investor-State Relationship: From Criticism to Constructive Engagement." The program is here. Here's the idea:

Governments seek to attract foreign direct investment (FDI) because it can contribute significantly to sustainable development through the transfer of capital and technology, job creation, linkages with local industries, infrastructure development and capacity building. Firms undertake FDI because it improves their access to markets and resources and increases their international competitiveness. These ostensibly different objectives can give rise to tensions in investor-state relations, especially in the context of allocating risks, responsibilities, and rights. Indeed, centuries ago international law already had norms that sought to minimize such tensions by governing states’ treatment of foreign merchants and traders. Over time, those norms have developed into a rich body of customary international law on the treatment of aliens, treaties governing foreign trade and investment, investment contracts allocating risks and benefits between the parties, and even human rights principles on non-discrimination and protection of property; moreover, these formal norms are supplemented by informal mechanisms and institutions (e.g., cultural norms, administrative procedures, networks).

Yet despite the long-running evolution of the investor-state relationship, the increasingly well-recognized importance of FDI for global sustainable development, and the extensive legal framework that has been constructed, tensions in the relationship remain. Moreover, the question of how to improve the investor-state relationship is still hotly debated. A key component of the question is whether the current ‘regime,’ encompassing all of the norms, laws and institutions, is exceedingly favorable to investors or to host governments. Indeed, during the late 1960s and the 1970s, the dominant approach to improving investor-state relationship was to control MNEs, whereas during the 1990s, a ‘rebalancing’ of sorts swung the trend toward liberalization and investor protection. At various points of time over the past several decades, the legal framework governing the investor-state relationship has been perceived by different stakeholders to be imbalanced and exclusionary of key stakeholders. Attempting to move from such criticism to constructive engagement is crucial for improving the investor-state relationship; and that, in turn, is key to maximizing investment for sustainable development.

This conference will start with a debate and discussion about the current state of investor-state relations and why finding a mutually beneficial framework has been such a challenge. What forces are pushing a re-evaluation of the investor-state relationship? Do governments feel that their interests are not adequately reflected in the existing regime? What challenges are investors facing under the current regime in terms of protecting their rights and interests? What roles are state-owned companies playing in the investor-state relationship? The debate will open the floor to explore the dominant forces pushing for a reformation of the existing regime and will consider how to rebalance the relationship to better protect the rights, interests and obligations of investors and states. The second panel will delve more deeply into one of the fundamental tensions in the investor-state relationship – namely, the tension between the predictability that investors require for long-term investments and the flexibility that host governments require to address issues of public interest and public policy. This panel will include a discussion of potential mechanisms to maintain an equilibrium between predictability and flexibility; in fact, both are in the shared interest of all stakeholders at different times, and finding mechanisms that allow for and anticipate fluctuations in the relationship over its duration would be mutually beneficial.

The third panel takes a closer look at options for mitigating and managing disputes between investors and states that can more efficiently and fairly protect the rights of foreign investors, host governments, and other stakeholders. This panel will explore the desirability and feasibility of adjustments to existing mechanisms, as well as the need for (and reality of) establishing alternatives or new mechanisms, if the current mechanisms are insufficient. Finally, the last panel will take a broader view toward reframing the investor-state relationship, in order to account forthe important roles of other relevant stakeholders as well as to maximize the outcomes of this relationship for sustainable development.

This conference will bring together a wide range of stakeholders in a “Davos-style” discussion without formal presentations, in order to foster a productive and dynamic conversation among all participants. The aim is to use the conference to advance practical solutions and strategies for improving the investor-state relationship and maximize the impact of investment for sustainable development.