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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.

 

The Nation has published a round up of the investment law reform process. It acknowledges that ‘Not every reform is without critics,’ and quotes the ICJ in the following section:

As the government consolidated its two investment laws, the International Commission of Jurists last month issued a statement, urging Myanmar to involve all stakeholders. As the resource-rich country would attract more investment in the area, key stakeholders should include affected communities and civil society, to promote a law that balances investors’ needs with human rights.

“This is a critical moment for the economic development of Myanmar. The laws it implements now will shape investment, economic development and, in turn, human rights for the foreseeable future,” said Daniel Aguirre, the international legal advisor to the ICJ.

“It is imperative that drafting is not rushed and that laws take into account international human rights laws and standards.”

ICJ has been working directly with DICA as well as with Myanmar civil society on investment laws and their potential impact on human rights in Myanmar.

While praising DICA’s willingness to consult civil society, including international non-governmental organisations, ICJ remains concerned that the draft law establishes significant rights for investors without protecting the rights of those affected by business activity. The draft would require investors to follow national laws without acknowledging that the existing national legal framework does not adequately protect human rights or provide remedies for those whose rights have been violated, it said.

Furthermore, the draft law does not establish or protect Myanmar’s ‘right to regulate’ to protect human rights or other social or environmental needs. Investment law should indicate Myanmar’s obligation to enact necessary regulations for the protection of human rights, including economic and social rights such as the right to health, in the future in order to avoid legal disputes when adopting these regulations.

“The draft law’s proposed legal framework would provide all investors the right to be consulted and challenge any new national law or regulation that may impact their profits,” said Aguirre. “This framework would allow businesses to challenge government policies aimed at addressing legitimate needs within the country, and it could create a regulatory chilling effect in which Myanmar’s government would find itself in the troubling position of evaluating whether the passage of new social policies would lead to costly lawsuits from investors.”

“The draft Law as currently formulated runs the risk of hindering progressive regulation to protect human rights in Myanmar,” said Aguirre.

For the full article see: http://www.nationmultimedia.com/aec/Myanmar-kicks-off-investment-law-modernisation-30255535.html

The recently launched Myanmar Foreign Investment Tracking Project’s initial results are disappointing:

PRESS RELEASE: Most foreign investors in Myanmar silent or evasive when asked about their human rights commitments

Amid rights concerns linked to investment surge, too few companies publicly discuss their human rights policies and due diligence efforts.

Myanmar, 17 February 2015 – Only a handful of foreign companies investing in Myanmar were able to point to substantive actions when invited to publicly respond to questions on their human rights commitments in Myanmar, Business & Human Rights Resource Centre reports today after reaching out to over 100 companies through its Myanmar Foreign Investment Tracking Project.

Fifty-seven of the 108 companies approached responded, and only 24 of them referred to human rights policies with respect to their investments or activities in Myanmar. Even fewer described undertaking due diligence efforts prior to investing. These findings echo concerns raised by local communities and human rights organizations that human rights issues are not being adequately addressed as foreign companies invest in the resource-rich country.

for the full story see: http://business-humanrights.org/en/press-release-most-foreign-investors-in-myanmar-silent-or-evasive-when-asked-about-their-human-rights-commitments 

The Business and Human Rights Resource Centre has launched a useful project that aims to track foreign investment in Myanmar. It highlights human rights law violations and criticism of foreign investment while allowing companies to respond.  The strength of this project is its balanced approach providing a forum for open discussion of business and human rights issues.

As of February 2015, the project has we have reached out to 108 companies from various sectors and regions. Out of those, 57 companies have responded. The record of responses and non-responses is useful for civil society to gauge which investors are willing to cooperate and invest in an open and transparent manner. It also shows us which companies are not cooperative.

Company responses can be important advocacy tools as civil society works to hold investors to their responsibility to respect human rights. These responses indicate their commitment. Their activities should be monitored to ensure that they fulfil these public commitments. The BHHRC will continually update the database.

The Project’s Webpage is available here: http://business-humanrights.org/en/myanmar-foreign-investment-tracking-project

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