The Netherlands has published its new model bilateral investment treaty. The treaty would place its enforcement under U.S. and Dutch influence. It combines invasive, far reaching rights for multinationals with a biased enforcement system.
An investment treaty gives multinationals far reaching rights to challenge government decisions. Its enforcement mechanism, investor-to-state dispute settlement, or ISDS, is widely criticised. See for instance George Kahale, III, ISDS: The wild, wild west of international law and arbitration.
In a letter to Dutch Parliament, minister Kaag describes the new model treaty’s most remarkable feature:
“The new model text abandons the common practice that arbitrators are appointed by the parties to the dispute. The new model text guarantees independent and impartial adjudication by having the tribunal appointed by the Secretary General of the Permanent Court of Arbitration or by the Secretary General of the International Center for Settlement of Investment Disputes.”
However, this will not guarantee independent and impartial adjudication, as the Secretary General of the Permanent Court of Arbitration has always been a Dutch official, and the Secretary General of the International Center for Settlement of Investment Disputes is nominated by the World Bank’s president, who has always been a United States citizen. The Bank’s president also appoints all three the arbitrators in annulment cases under ICSID rules (the only possible appeal under these rules).
The new Dutch model investment treaty places ISDS under U.S. and Dutch influence. It combines invasive, far reaching rights for multinationals with a biased enforcement system. The reform failed.
Vrijschrift had pointed this out in its submission to a consultation on the draft. However, the Dutch government persisted in its approach. The issues Vrijschrift had noted regarding the right to regulate, the interpretation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and the protection of personal data haven’t been solved either.
Neo-colonialistic?
In a tweet I called the model investment treaty neo-colonialistic. Ronald Roosdorp, Director for International Trade Policy & Economic Governance, Dutch Ministry of Foreign Affairs, responded:
“If you start making ridiculous accusations, @Vrijschrift, I intend to suspend our (Twitter) discussions 😕”
We have opposing opinions. From my point of view, minister Kaag’s statement that the adjudication would be “independent and impartial” is not correct. The appreciation “neo-colonialistic”, on the other hand, alerts third countries to a possible show-stopper – as such it makes sense. It is provocative, but not ridiculous. The Dutch ministry seems self-righteous; third countries should not buy into that, but rather scrutinise the treaty’s appointment procedures of arbitrators.
The Netherlands wants to attract multinationals. It facilitates tax evasion and gives multinationals great supranational power to challenge government decisions. The proposal continues this practice.
The Dutch approach is penny wise, pound foolish. We need to strengthen our democracies and our ability to respond to crises, including to climate change. The Dutch model text is irresponsible.
