Archive

Foreign Investment

 

IMG_1971

On Saturday evening I was asked by Al Jazeera news to comment on economic aspects of the Rohingya human rights crisis in Rakhine State. Here is a summary of my comments:

Al Jazeera: Are you surprised to learn that the Myanmar government will harvest the rice crops of displaced Rohingya?

Me: No, I’m not surprised. For a government that pursues policy resulting in hundreds of thousands of displaced people land and crop expropriation is not a big leap. This is part of a national human rights problem where an estimated half of the population does not have the legal right to the land they live on; the system of land tenure in Myanmar is broken. The Rohingya will suffer, in particular, because of the widespread acceptance that they are illegal immigrants in the first place.

Al Jazeera: Is land grabbing the reason for this ethnic cleaning and conflict? Is the government trying to get a hold of not just the rice but the valuable resources in the area?

Me: Certainly relatively plentiful natural resources in Rakhine are underexploited. But this is an ethnic, religious and nationalist conflict. Land grabbing is not the cause but will likely be one of the results.

Al Jazeera: What is next for the Rohingya? What should the international community do or is it too late?

Me: Well, this situation should not be a surprise to the international community. Human Rights organisations have been warning the international community, diplomats in the country and the national government that human rights violations against the Rohingya were causing a precarious situation likely to result in violence, mass exodus and displaced people. ‘Gloomy’ warnings were disregarded as the preferred narrative was that Myanmar is ‘open for business.’

The international community needs to now support the Rohingya and ensure the cost of this humanitarian disaster does not fall solely on Bangladesh. Neighbouring countries need to encourage the Myanmar government to protect, promote and fulfil the human rights of all people in Rakhine State, especially the Rohingya, and ensure they are able to return to their land. But most importantly, leadership at the national level is required to foster a culture more accepting of human rights. This is not just the role of the government and Aung San Su Kyi:  Public intellectuals, academics, civil society organisations, lawyers and national media all need to speak out in support of human rights in Rakhine State.

 

Advertisements

This article appeared in the Irrawaddy on 25 May 2017 here: https://www.irrawaddy.com/opinion/editorial/use-law-protect-human-rights-environment-irresponsible-investment.html

By DANIEL AGUIRRE 25 May 2017

Burma’s 2016 Investment Law and the implementing Investment Rules issued in April 2017 create space for the government and civil society to facilitate responsible investment and exclude investors that have track records of environmental destruction and human rights abuses.

This means that affected individuals and communities must now test Burma’s commitment to the rule of law. There are new opportunities for civil society to use law to hold them accountable. In this regard, both international law and Burma’s constitution guarantee access to justice for rights abuses.

The Investment Rules instruct the Myanmar Investment Commission (MIC) to consider whether investors have demonstrated a commitment to responsible investment. In considering the good character and reputation of the investor, the MIC may study whether the investor or any associate with an interest in the investment broke the law in Burma or any other jurisdiction. The rules explicitly mention environmental, labor, tax, anti-bribery and corruption or human rights law.

What this means is that if an investor is determined to have committed a crime, has violated environmental protection standards or was involved with human rights abuses, the MIC should not grant it a permit.  If such a company applies for an investment permit, civil society should bring its record to the attention of the MIC and advocate for the rejection of a permit.

Successive governments in Burma have focused on increased investment to develop the country and improve its people’s standard of living.

At the same time, human rights and environment proponents from civil society have opposed many investment projects, citing the impact on the environment and human rights of local communities. They complain that land rights are not adequately protected, that environmental impact assessments are not implemented and that they lack access to justice for corporate human rights abuses.

There are challenges to using the law to protect human rights in Burma. Disputes related to business activity are often considered sensitive political matters in which the courts are unable or unwilling to intervene. They are reluctant to review crucial decisions of administrative bodies or to hold rights abusers accountable.

But community activists, human rights defenders and lawyers have increased opportunities to pressure the courts to apply the law and should do so. Lawyers have an important role in protecting human rights by representing local communities.

Courts must become a venue to challenge administrative decisions that allow for irresponsible investment that does not comply with national law, and where appropriate, obtain remedies and reparations for victims of human rights violations.

The Investment Law and its rules, which govern both local and foreign investment except within special economic zones, provide legal guarantees for investors to access information and protections against expropriation including compensation and access to due process if changes in regulation affect their business. Investors can also access long-term rights to use land.

Civil society should help to ensure that only responsible investors benefit from these protections. According to the law, the MIC is the gatekeeper that issues permits and endorsements for many would-be national and international investments likely to cause a large impact on the environment and local community.

In order to ensure that the protective aspects of the law are effective, courts must have some power of review, at least to ensure that administrative bodies, such as the MIC, are acting reasonably and in accordance with the law, while respecting and protecting human rights. If the MIC grants permits for companies that do not meet the requirements outlined in the Investment Rules, their decisions must be subject to review by the judiciary.

Burma’s courts have the authority to review administrative decisions, particularly through the application of constitutional writs. Lawyers can use the writs of mandamusand certiorari to secure the performance of public duties and quash an illegal order already passed by public bodies such as the MIC. This would help ensure the MIC uses its mandate to prevent irresponsible investment.

Likewise, investors that fail to respect human rights or unlawfully cause damage to the environment must be held accountable; but there are few options to do so in Burma. Criminal prosecutions against companies, actions imposing administrative sanctions, and civil suits face a variety of procedural hurdles, particularly if involving joint ventures with state run enterprises.

For example, a negligence civil suit brought by villagers against the Heinda tin mine in Dawei District was unsuccessful because the 1909 Limitations Act demands complaints to be brought within one year of damage. Section 80 of the Civil Procedure Code requires prior notice and the names of plaintiffs to be given to the government two months before filing a suit against the government and allows small procedural defects to preclude a claim. Lawyers are sometimes unfamiliar with these procedures and communities are reluctant to put their names to such cases fearing reprisals.

Clearly there are significant challenges to ensuring that investment in Burma does not adversely affect human rights. To overcome these, civil society and lawyers must engage the administration—the MIC—to ensure only responsible investments is permitted and start to use the judiciary to review its actions. Likewise, cases must continue to be taken against investors that abuse human rights and harm the environment. Powerful investors must be constrained by the confines of the law, including human rights law.

Unless civil society and lawyers can use the legal framework to address these concerns, Burma’s judicial system is unlikely to develop; lawyers will not gain valuable experience and the public will remain distrustful. The process is long and arduous but necessary to protect human rights and the environment from irresponsible investment.

In February, 2017 the International Commission of Jurists released a comprehensive report on the Special Economic Zones and the corresponding laws in Myanmar. It examines the State duty to protect human rights and finds that the laws come up short. It  provides recommendations on how the government in Myanmar can take steps to avoid repeating mistakes of the past as it develops the SEZ in Kyauk Phyu, Rakhine State.

The Government of Myanmar should impose a moratorium on the development of Special Economic Zones (SEZs) until it can ensure SEZs can be developed inline with international human rights laws and standards, said the ICJ at a report launch held today in Yangon.

The 88-page report, entitled Special Economic Zones in Myanmar and the State Duty to Protect Human rights, assesses the laws governing Myanmar’s SEZs and finds that the legal framework is not consistent with the State’s duty to protect human rights.

For example, a case study examining the Kyauk Phyu SEZ in Rakhine State shows that the land acquisition process initiated in early 2016 lacks transparency, does not comply with national laws on land acquisition, and risks violating the rights of 20,000 residents facing displacement.

“The SEZ Law undermines the protection of human rights, and critical legal procedures are often poorly implemented, so the Kyauk Phyu project risks repeating the rights violations that have been associated with SEZs in the past,” said Sam Zarifi, the ICJ’s Asia Director.

“The NLD-led Government can make a break from the past by ensuring economic development projects benefit Myanmar’s people, rather than rushing to facilitate projects which result in human rights violations and ultimately undermine sustainable development,” he added.

Myanmar’s legal framework for SEZs is based on the 2014 SEZ Law and incorporating national laws governing land, labour and the environment.

The report shows that while national laws require Environmental Impact Assessments and the application of international standards on involuntary resettlement, the SEZ Law does not establish clear accountabilities for the implementation of these procedures.

This has contributed to human rights violations and abuses in each of Myanmar’s three SEZs, the report says.

“It has been encouraging that government officials have emphasized their commitment to protecting human rights in SEZs in line with the rule of law,” said Sean Bain, the ICJ’s Legal Consultant in Myanmar and lead author of the report.

“The legal reforms recommended in this report will be critical to meet these commitments while fulfilling the State’s duty to protect human rights in SEZs. We also suggest that investors take heightened due diligence measures to ensure they are not complicit in rights violations,” he added.

The report was based on extensive legal research as well as interviews with over 100 people, from affected communities to investors and government officials, during 2016.

Key recommendations to the Government of Myanmar

  • Protect human rights in Myanmar’s SEZs by amending the SEZ Law, through meaningful public consultation in accordance with international standards.
  • Order a moratorium on the development of SEZs, and on entering related investment agreements, until the SEZ Law has been amended to ensure conformity with international human rights law and standards.
  • Commission a Strategic Environmental Assessment for the Kyauk Phyu SEZ, in line with Myanmar’s environmental conservation laws. This would involve consultation to inform decision-making on the Kyauk Phyu SEZ and related projects, by identifying cumulative environmental and social impacts of all the developments in Kyauk Phyu, while considering conflict dynamics and economic development in Rakhine State.
  • Suspend land acquisition in Kyauk Phyu until after the completion of a resettlement plan that is in line with international standards, as required in the EIA Procedure.

Contact

Sean Bain, ICJ Legal Consultant in Myanmar, t: +95 9263533230 ; e: sean.bain(a)icj.org

Myanmar-SEZ assessment-Publications-Reports-Thematic reports-2017-ENG(full report, in PDF)

Myanmar-SEZ assessment SUMMARY-Publications-Reports-Thematic reports-2017-ENG (executive summary of the report, in PDF)

Myanmar-SEZ assessment full-Publications-Reports-Thematic reports-2017-BUR (Burmese version of full report, in PDF)

Myanmar-SEZ assessment-Publications-Reports-Thematic reports-2017-BUR(Burmese version of the executive summary, in PDF)

This article was published in the Myanmar Times on 30 August 2013 at: http://www.mmtimes.com/index.php/opinion/22221-reconciling-investment-protection-and-human-rights.html 

This month the newly elected Myanmar government released its economic policy and announced that it will seek to attract even more foreign investment than under previous administrations. But the new policy did not outline how it will ensure that foreign investment will contribute to the protection of human rights and sustainable development.

Myanmar’s previous military government was committed to investment protection treaties. Will the new government follow suit? These treaties between states enable foreign investors to challenge new laws and policies by the host government – potentially including those protecting human rights and the environment – through international arbitration if they believe these may adversely affect their profits.

Foreign governments want their investors to benefit from the opening up of Myanmar’s economy. Myanmar has already entered into investment protection treaties with Japan, South Korea, the Philippines, China, Laos, Vietnam, Thailand, Israel and India and is party to the ASEAN Comprehensive Investment Agreement. Myanmar is negotiating a new treaty with the European Union and exploring options with Singapore, among others.

These investment treaties grant investors equal standing with Myanmar’s government in disputes over national laws and policy in international arbitration. Their broad provisions fail to reconcile investment protection with the host state’s right and duty to regulate for the benefit of human rights and sustainable development. Myanmar must ensure that provisions on the treatment of foreign investors limit their rights to challenge legitimate, non-discriminatory, public purpose legislation.

Seeking to attract investment by giving foreign businesses more economic security should not compromise government’s ability to regulate in favour of the rights of its people. Protection of investments must not be given priority over protection of human rights and the environment. The UN Guiding Principles on Business and Human Rights urge governments to maintain adequate domestic policy space to meet their human rights obligations when pursuing investment treaties.

Before agreeing to further investment treaties, Myanmar should commit to adopting and enforcing new laws in line with international human rights and environmental standards. It should evaluate whether these investment treaties are necessary to attract foreign investment to Myanmar. It should follow the regional trend and revisit old treaties that empower foreign investors at the expense of local rights holders.

The National League for Democracy-led government came to power promising change, to establish the rule of law and to protect human rights. In order to do so, the government will need to create new laws and policies in line with international laws and standards in the public’s interest. For example, Myanmar has recently signed the International Covenant on Economic Social and Cultural Rights, signalling its willingness to put in place policies to progressively achieve universal healthcare, education and social security. These rights are also protected in Myanmar’s constitution.

But new policies designed to fulfil these rights may give rise to disputes under investment treaties. For instance, it is possible that foreign investors will claim that a new policy on public health (for instance by requiring plain packaging for cigarettes) or minority rights (calling for affirmative action for minorities) or strict environmental protection standards (improved environmental impact assessment regulations) would harm their expected profits or other rights that are broadly defined in the investment protection agreement.

These are not outlandish examples. There are a number of cases where new laws and regulations passed by democratically elected governments have been challenged by foreign investors before arbitral tribunals. In Canada, a foreign investor successfully challenged an environmental impact assessment board’s decision to deny it a permit and asked for more than US$100 million in damages. Affirmative action policies in South Africa and environmental protection standards in Germany have been challenged. Just the threat of arbitration can lead to a “regulatory chill”, forcing back public interest legislation and preventing environmental protection measures.

These are costly disputes – some arbitral awards run into the billions of dollars against host governments. Recent challenges by tobacco giant Phillip Morris against Australian and Uruguay plain packaging cigarette laws, designed to protect public health, were unsuccessful but cost millions in lawyer’s fees. Australia reportedly paid $50 million to defend its law. Myanmar cannot defend repeated challenges by deep-pocketed investors. In Myanmar, this money could be better spent improving the dire state of health and education.

Around the world, people are demanding that negotiation and adoption of investment treaties be transparent; increasingly, people are opposing treaties that grossly favour the interests of investors over the interests of the public. Investment treaties are often negotiated behind closed doors with little public or parliamentary oversight. These are important decisions that impact on the rights of people in Myanmar. Myanmar’s civil society has not yet had the opportunity to participate in genuine and informed consultation.

Many states have turned against international dispute resolution in investment treaties. South Africa, Bolivia, Ecuador, Venezuela and Indonesia have started to cancel or phase out existing treaties. Others, including India, are reviewing current treaties and rethinking future negotiations. Brazil, Russia, India and China are considering an alternative system that considers issues relevant to emerging economies.

The Indian government intends to replace existing investment treaties with new ones designed to balance investor’s interests, regulatory space and investor responsibilities. It seeks to limit protections for foreign investors, drop controversial aspects of treaties and narrow the scope of others to reduce disputes. While it allows access to international dispute settlement, foreign investors will have to pass through the domestic courts first. The new investment treaties will also include an exhaustive list of economic, environmental and social measures to be exempt from challenge by foreign investors.

Myanmar would do well to follow this approach. Improving its human rights situation and maintaining sustainable development require sweeping legal reform. The threat of costly legal challenges by foreign investors could dissuade policy makers from making necessary changes, discouraging them from fulfilling human rights and environmental obligations in order to promote investment.

This month the National League for Democracy released its new economic policy, and stated it seeks to attract more foreign investment. Given that the NLD has inherited inadequate land regulation and an ineffective judiciary, it is unclear how increased investment would be reconciled with NLD policy to address the land rights of people in Myanmar.

Foreign governments want their investors to cash in on the investment boom but have no confidence in Myanmar’s regulatory framework and its judiciary. Many, such as the European Union (EU), are busily negotiating Bilateral Investment Treaties (BITs).

These treaties guarantee investor’s interests as ‘rights’ and give their investors access to Investor-State Dispute Settlement (ISDS) mechanisms outside of Myanmar. ISDS enables foreign companies to challenge new laws and policies that they view adversely affect their profits, including future land reforms.

Myanmar has entered into BITs with Japan, South Korea, the Philippines, China, Laos, Vietnam, Thailand, Israel and India and is party the ASEAN Comprehensive Investment Agreement, all of which include ISDS provisions that undermine the sovereign “right to regulate”.

Myanmar has a land regulation problem requiring legal reform. For decades the government expropriated land with impunity. Doling out land to crony businessmen and unscrupulous foreign investors became the norm. An influx of recent investment has increased demand for land, raised prices and further enriched those with connections. Poor land regulation means that some investors continue to be granted land obtained illegally or under dubious circumstances.

Under the current land laws more than half of Myanmar’s land users do not have legal tenure leaving them vulnerable to land grabs and forced eviction. The current land laws were designed to encourage large-scale land use and promote economic growth. The procedures for land acquisition under antiquated laws in Myanmar are rarely followed in practice. People have little or no access to justice, as the courts have proven reluctant to address sensitive cases. Instead, many communities find themselves charged with trespassing on land on which they have lived for generations.

The NLD government was swept into power promising to reform the land law and deal with widespread land grabbing. In order to protect land rights, the new government will need to create new law and policy restricting such practice and holding those who benefitted accountable.

But new law and policy on land redistribution and the recognition of communal land rights may conflict with the interests of foreign investors and give rise to costly disputes under BITs. In relation to ‘land grabbing’, ISDS could protect one-sided land deals that complied with bad national law and resulted in forced evictions. Investors could obtain market value compensation even if they acquired the land at less than market price.  Just the threat of litigation may be enough to dissuade needed land reform.

There are a number of international examples where new laws and regulations passed by democratically elected governments have been challenged by foreign investors through ISDS. These are costly disputes – some arbitral awards run into the billions of dollars. Recent challenges by tobacco giant Phillip Morris against Australian and Uruguay plain packaging cigarette laws were unsuccessful but cost millions in Lawyer’s fees. Australia reportedly paid 50 million USD to defend its law.

Myanmar lacks the legal and financial capacity to defend repeated challenges by deep-pocketed investors. In Myanmar, this money could be better spent improving the dire state of health and education.

Many states have turned against the inclusion of ISDS in BITs. South Africa, Bolivia, Ecuador, Venezuela, and Indonesia have started to cancel or phase out existing BITs. Others, including India, are reviewing current BITs and rethinking future negotiations. From Australia to Europe and North America, BITS are now part of public debate. Civil society is voicing its concerns with the ISDS system, questioning the rationale of the global investment protection system itself. Besides, there is not even clear evidence that ISDS and BITs actually increase foreign investment.

Economic investment should contribute to the rule of law and human rights. In order for this to happen, Myanmar must align policies with a vision of development based on local and national aspirations, placing people, and their rights, at the centre of the process. BITs are often negotiated behind closed doors with little public or parliamentary oversight. These are important decisions that impact on the rights of people in Myanmar.

Public participation is essential to the law reform process. Try telling farmers that investors should have access to special courts to protect their interests while their land can be taken without adequate compensation and without due process. Civil society has not yet had the opportunity to participate in genuine and informed consultation on Myanmar’s BITs. Relying on EU consultation procedures, for example, is not good enough.

BITs should refer to the various legal regimes, including international human rights law, to which Myanmar has legal obligations. This will help ensure that ISDS cannot be used to override Myanmar’s other legal commitments. Myanmar has recently signed the International Covenant on Economic Social and Cultural Rights, signalling its willingness to put in place policies to progressively achieve healthcare, education and social security. These rights are also protected in Myanmar’s constitution. ISDS threatens the ability of government to fulfil these rights.

Before agreeing to further BITs, Myanmar must adopt and enforce a new land law in line with international standards recognising the tenure of land users. In future BITs, Myanmar must prevent ISDS being used to challenge legitimate public purpose legislation. It should revisit old BITs that already allow investors to do so.

Ensuring legal certainty for foreign investors does not require empowering companies to challenge public-interest policies. Attracting foreign investment should not compromise government ability to regulate in favour of the rights of its people.

Re: Burma Responsible Investment Reporting Requirements

We write in response to the public reports submitted by U.S. companies in compliance with the Burma Responsible Investment Reporting Requirements (“Reporting Requirements”) issued by the US Department of State.

Composed of 60 eminent jurists and lawyers from all regions of the world, the International Commission of Jurists promotes and protects human rights through the Rule of Law, by using its unique legal expertise to develop and strengthen national and international justice systems. The ICJ appreciates the U.S. government’s efforts to promote responsible investment in Myanmar and to ensure that U.S. companies are responsibly managing their business activity in the country. We support your decision to continue to sanction businesses under the National Emergencies Act barring U.S. individuals and companies from investing or doing business with people linked to human rights abuses under the army’s military rule.

The ICJ urges caution over the United State’s recent decision to allow for an exception to the sanctions regime for people who have already been documented as having links to the military regime and implicated in human rights violations.1 This caution reflects the ICJ’s work with the Directorate of Investment and Company Administration, the Attorney General’s Office, and the Union Supreme Court of Myanmar, as well as civil society organizations, to strengthen and support local efforts at ensuring that investment protects and promotes the rule of law, human rights and the environment. In this regard, the ICJ has visited and researched on the human rights and environmental impacts of investments in the 3 Special Economic Zones (“SEZ”), as well as other non- SEZ sites, in the country.

We believe that future reporting must be strengthened to ensure that U.S. companies comply with the Reporting Requirements, conduct due diligence and disclose adequate information transparently about the impact of their business practices on human rights in Myanmar. This is especially crucial in light of significant reporting gaps in July 2013. Failure to strengthen the requirements will undermine the goal of the Reporting Requirement to be a tool for promoting investment that reinforces those political and economic reforms that are compliant with the rule of law and human rights and help to empower civil society.

The full document will be available on the ICJ webpage at: http://www.icj.org later today. The full document is attached here: Myanmar ICJ Letter to US State Dept 25Jan2016

For the full story see the Irrawady at: http://www.irrawaddy.com/burma/after-much-deliberation-investment-law-approved-by-parliament.html

After months of deliberation, Burma’s new investment law was approved by a joint sitting of Parliament on Thursday, replacing interim laws passed earlier in the term of President Thein Sein.

The law, which combines the 2012 Foreign Investment Law and the 2013 Myanmar Citizens Investment Law, alters the mandate of the Myanmar Investment Commission (MIC) and adds some nominal human rights protections to future foreign investment projects, among other changes.

Aung Naing Oo, director-general of the Directorate of Investment and Company Administration, told reporters in September that the investment law addressed human rights concerns raised by non-governmental organizations in the past.

 

%d bloggers like this: