International experts have warned that the use of investment treaty ‘Investor-State Dispute Settlement (ISDS)’ for attracting foreign investments into Myanmar is risky as it grants the investors the right to initiate dispute settlement proceedings against the government under international laws.
They advised Myanmar government not to
rush with such treaties but it needs to practice transparency and obtain
public support before signing agreements as breaching the contracts may
cost millions of dollars in compensation to investors.
“ISDSs are usually used to attract
foreign investments. But they are dangerous. For example, if the
government passes a new policy and it goes against with the treaty, then
the investor can sue the government. The government may lose millions
of dollars, and that money is the public money. They can use other
options than such agreements for investment,” Tom Kramer from
Transnational Institute (TNI) said.
He said, “If the issues like
Letpadaungtaung case (public protest against Chinese-backed copper mine
in central Myanmar) arise, the government needs to review the contract.
And if the agreement is a ISDS, then the company may file a lawsuit
against the government. Therefore, we suggest the government should not
hasten to sign such treaties.”
Great care should be taken with the ISDS
as court costs for such cases are generally very expensive and fees for
specialized lawyers can be up to millions of dollars, he added.
Pietie Vervest, an expert on
International and EU Trade and Investment, said “The weakness of ISDS is
the government unable to sue the investor, even if they break human
rights or cause environmental damages. This is very dangerous especially
for countries like Myanmar. If the government has to pay compensation,
they will use the public money.”
The expert gave the example of
Indonesian government which signed the treaty with UK-based mining
company Charchill, and was sued to claim compensation of US$2 billion
for future losses on the company side after the government passed laws
restricting mineral exports.
Myanmar has recently opened up, and
placed itself on the track towards democracy in recent years. Its
political and economic reforms enabled it to re-engage with the global
community after decades of isolation. President Thein Sein’s foreign
trips have involved signing bilateral trade and investment treaties.
Myanmar has also signed investment treaties with China and India. The
treaties are usually long term agreements for more than 10 year
projects, observers said.
source: Eleven Myanmar
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