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.