Global public interests in international investment law.

Position:Proceedings of the 2015 Annual Meeting of the American Society of International Law: Adapting to a Rapidly Changing World - Discussion
 
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This panel was convened at 11:00 a.m., Friday, April 10, by its moderator David D. Caron of the Kings College London Dickson Poon School of Law, who introduced the panelists: Jose Daniel Amado of Miranda & Amado; Clara Brillembourg of Foley Hoag LLP; and Julie A. Maupin of Max Planck Institute for Comparative Public Law and International Law.

INTRODUCTORY REMARKS BY DAVID D. CARON *

This panel is intended to complement several other discussions at this annual meeting concerning international investment law, but with a particular focus on the impact of global public interests on international investment law and the reverse--how international investment law might impact those interests themselves. The panel is intended to look at how this relationship is working, how we see it manifest itself, and how we might look at constructive approaches going forward. It is very easy to have a view about investment arbitration from the perspective of global public interests, either for or against them. Our speakers will try to remove themselves a little bit from that perspective and attempt to talk about how these two areas are interacting.

REMARKS BY CLARA BRILLEMBOURG ([dagger])

Good morning, I will be discussing the intersection of public health and investment arbitration through the lens of the tobacco cases.

As many of you may know, there are four cases that have raised the issue of tobacco control in the context of trade and investment disputes, including two plus cases before the World Trade Organization (WTO). I say "two plus" because one of those cases, the Plain Packaging case against Australia, is technically five cases brought by different WTO-members. The first WTO case was the Clove Cigarettes case in which Indonesia brought a dispute against the United States for its ban on flavored cigarettes that exempted menthol cigarettes. This was followed by the current dispute brought by five states against Australia for its plain packaging regulation, which prohibits the use of logos and trademarks on tobacco packaging and mandates a specific font and color for the brand presentation.

I will be focusing on the investment arbitration context where there are two ongoing cases: one by Philip Morris Asia against Australia, also for its plain packaging regulations; and the other brought by three subsidiaries of Philip Morris International (two Swiss, one Uruguayan) against Uruguay for two of its tobacco control regulations that were part of a larger suite of tobacco control reform. The two regulations were: a requirement that warning labels cover 80 percent of tobacco packaging; and also the single presentation requirement that prohibits the use of more than one brand variant in a brand family in order to counteract the deception caused by the use of multiple variants associated with light, low, medium, mild, silver, gold--you name it--cigarettes, which perpetuated the myth that one cigarette might be healthier than another.

I should disclose from the outset that I am counsel to Uruguay in the Philip Morris case and so that gives me a particular perspective on these issues. That case, along with the other tobacco cases, has had a widespread impact and raised tensions between a state's commitments in investment and trade treaties and other domestic and international commitments concerning public health, and tobacco control specifically.

In the case of tobacco, there are unique issues that are raised because tobacco is a unique product. It is the only legal consumer product that when used as prescribed will kill up to half of its users. This means that every year it kills nearly six million people, an average of about one person every six seconds. Thus, given the implications, tobacco control has a specific treaty calling for member states to enact stronger and more comprehensive tobacco control regulations, which is called the Framework Convention on Tobacco Control (FCTC). It is the first international treaty undertaken by the World Health Organization (WHO) in its history and has been wildly successful with 180 member states.

Of course, there are also the international human rights treaties that contemplate public health protections and the ever-important domestic legal requirements, which call on states to protect their citizens and preserve their health. These domestic commitments often come up in the context of domestic litigation, as has occurred in Uruguay and Australia. The cases challenging these tobacco control measures were first brought in domestic courts under domestic laws, and in both cases, the courts did not uphold the challenges. Yet, the cases continued on in the form of investment arbitration.

These other commitments thus raise important questions when they are brought into this context of investment arbitration. Are they taken into account? Are the mechanisms to take them into account sufficient? And what are the limits of those mechanisms? Because states are unsure of the answers to these questions, they are taking both defensive and offensive action. States have reacted defensively either as a result of direct threats from tobacco companies of potential international arbitration, or because of having watched Australia and Uruguay go through their own arbitrations. As a result, some states have restrained themselves from enacting stronger tobacco control regulations. Other states have moved forward, by strengthening their tobacco measures and taking proactive steps in terms of reviewing their investment and trade commitments. Some states have proposed specific provisions to address their concerns in treaties under negotiation, like Malaysia and the United States in the case of the Trans-Pacific Partnership (TPP), and we also heard a bit about this in the Transatlantic Trade and Investment Partnership (TTIP) panel earlier today. Other states are reconsidering their commitment altogether to Investor-State Dispute Settlement, or ISDS, like Australia's reconsideration of its bilateral investment treaties (BITs) and the current discussion of the European Commission on the TTIP.

And these questions will continue to arise as states continue to strengthen their tobacco control regulations. Ireland, the UK, and even France are planning to enact the plain packaging requirement that is being challenged in the Australia cases. Many Southeast Asian countries have already surpassed the 80 percent warning label requirement that is being challenged in the Uruguay case. Many of the treaties with these other public health commitments I mentioned earlier lack dispute resolution provisions. Therefore, many of the disputes that arise in this intersection may continue to be funneled through investment treaties that contain strong dispute resolution mechanisms.

So, for investor-state arbitration to continue to thrive, I submit that we need to find a way to better align these interests and commitments, otherwise state-users may ultimately choose to withdraw from the system or change it radically.

There are various options available for the different groups involved in this field. First the states, second the tribunal and their forums, and third the interested third parties.

I will start with the state options. Many states, scholars, and practitioners have given a lot of thought to this issue. For purposes of this presentation, I have adopted the excellent schema used by Andrew Mitchell and Elizabeth Sheargold of Melbourne Law School in discussing the available options for states, again with the specific view to the concerns around tobacco control. There are both pros and cons to each of these options, but unfortunately given the time constraints I will simply lay out the overview without giving an opinion as to the merit of the potential options, although I am sure that will come up in the questions and answers.

The first and most extreme option, which we have been hearing a lot about, is excluding Investor-State Dispute Settlement from the relevant treaties altogether. This raises questions about how that would affect the promotion of investment, and how that would be accepted by many states involved in these negotiations. It would also still allow for disputes to be raised between states and through the mechanisms in existing BITs and other multilateral treaties.

The next option is controlling access to ISDS. There are many ways in which this could happen. For example, one could see states requiring preliminary consultation between health or finance authorities and only if those authorities felt that the dispute met the established criteria, could it then continue into investment arbitration. I understand that the United States has considered prior consultation in the TPP regarding tobacco disputes in particular, but only in the context of disputes between states. This technique has been used for tax measures in many BITs and we also see a new manifestation of this kind of option in Brazil's very recent BIT with Mozambique.

Another option would be procedural reform of ISDS, which has come up often in this conference. There are innumerable ways this could be done--for example, stricter time frames to prevent delay, but many states need the extra time in order to accommodate the internal consultations required within them. States could explicitly limit the remedies available in tobacco cases or public health cases more broadly. For example, in the Philip Morris v. Uruguay case, Philip Morris subsidiaries are requesting the tribunal to order Uruguay to withdraw the challenged regulations. This, of course, raises serious questions about the true power of investment tribunals and the scope of the available remedies, and brings to a fore the tensions between public policy, public interest, and investment arbitration. Or one could see states requiring a "loser pays" provision that would call on claimants, either broadly or specifically in the context of public health or tobacco, to thoroughly consider the validity...

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