The Brazilian model of Bilateral investment treaties Prof. Dr. Alberto do Amaral Júnior

An overview The Brazilian model of bilateral investment treaties emerged from the need to provide favorable conditions for Brazilian companies that make investments overseas. Brazilian companies did not fear expropriation or nationalization of their assets, but they claimed ease in obtaining entry visa, knowledge of foreign legislation, concession of environmental licenses, difficulties in identifying governmental authorities in the recipient state of investments, resolution of issues before governmental authorities related to a project.

An overview The Brazilian model went beyond those concerns. It sought to reach the balance of interests and to preserve a public space for regulatory policies. Other motivations: excessive protection to foreign investor to the detriment to national enterprises and prevention of disputes. Bilateral investment treaties have three fundamental pillars: risks prevention and mitigation; institutional governance and thematic agendas for cooperation and investments promotion.

An overview Risks prevention and mitigation: institutional mechanisms to limit possible disputes, inclusion of provisions on compensation. Institutional governance: ombudsman and a joint committee. Thematic agendas are built simultaneously to the treaty conclusion on the basis of mutual interests.

An overview Direct investments are any kind of good or right directly or indirectly belonging or controlled by an investor of one of the parties in the territory of another one. Those goods that don’t figure in a list are not covered. Investments in portfolio remain excluded. Investor: physical and legal persons.

Negative aspects The lack of fair and equitable treatment clause as well as the umbrella clause. Absence of any provision of indirect expropriation. Difficulties to implement the institutional governance. Doubts around the effectiveness of the joint committee. Risk of making dispute settlement excessively politicized.

Positive aspects Social and corporate responsibility.   Ombudsman. Function: to prevent disputes, to provide information to investors and to be a channel between the investor and the recipient country. Transparency.