Netherlands Model Investment Agreement

The ILO model provides that disputes between investors and states will be settled through arbitration, but also requires contracting parties to “follow between them and other interested partners the multilateral reform of ISDS.” In particular, unlike EU trade agreements, there is no commitment to some type of multilateral reform. The Minister also wrote to the House of Representatives to say that the procedure in the model text, before the current system was replaced by the Multilateral Investment Tribunal, would improve time and costs, which would be a significant benefit to SMEs. The report on investment measures implemented by G20 members between mid-May and mid-October is undoubtedly easily integrated. With the exception of the broad commitment “Promoting equal opportunities and women`s and men`s participation in the economy,” the provision does not impose concrete commitments on the contracting parties and its potential impact on achieving equality between men and women is therefore unclear. However, the inclusion of such provisions is a positive recognition of the link between trade, investment, gender equality and development. The ILO model obliges contracting parties to promote economic cooperation and to promote the creation of conditions conducive to “responsible investments in their territory that contribute to sustainable economic development” (new bold formulation). This is an interesting reduction in the importance of contracting parties` commitment: it allows the court to determine whether a particular investment is both responsible and contributes to sustainable economic development – potentially broad concepts. While it is time to modernize some ISDS contracts and reconsider certain elements of international arbitration in order to strengthen their legitimacy, the origins of investment contracts must be taken into account: if host countries see benefits in foreign investment, investment contracts should inspire confidence. International arbitration has changed enormously over the past two decades: it is more diverse than ever, as all members of the Community are committed to gender diversity and allow cross-border tutoring, allowing a new generation of referees to rise in rank. This progress would result in a sudden halt, whether by the permanent appointment of the MIC or the removal of the double hat or the possibility for the parties to appoint arbitrators. In any event, investment contracts are supposed to attract investors, not discourage them.

But it is not clear how the new ILO would reduce duration and costs. It seems that a new appointment mechanism and the abandonment of party autonomy – to be discussed below – are likely to create uncertainty. If the parties are no longer able to appoint the best qualified arbitrators to rule on the dispute, it is more likely that a nullity procedure will be followed. Given that the Dutch government seems to welcome the prospect of a multilateral investment tribunal, it is also important to consider the position of investors and the potential impact of MIC on investment.

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