Alexander Uff | November 18, 2018 balancing investment protection and the right to regulate: Investment Treaty Provisions Alexander Uff | November 18, 2018

US Model BIT (2012), Article 21 “Nothing in Section A [Standards of protection] shall impose obligations with respect to taxation measures” except [provisions on expropriation]

COLOMBIA MODEL BIT (2017), Section aa SCOpe and definitions Scope of Application This Agreement is applicable to existing Investments at the time of its entry into force, as well as to investments made thereafter in the Territory of a Host Party by investors of the other Contracting Party, in accordance to the law of the Host Party. This Agreement does not bind any Contracting Party in relation to any act or fact that took place, or disputes that may have arisen or have been settled, before the entry into force of this Agreement. Nothing in this Agreement shall bind either Contracting Party to protect investments made with capital or assets derived from, or used in activities deemed illegal pursuant to the Contracting Parties’ laws and regulations. This Agreement shall not apply to any Measure related to taxation. This Agreement shall not apply to public debt operations. This Agreement shall not apply to Measures adopted by any Contracting Party, in accordance with its law, with respect to the financial sector for prudential reasons, including those Measures aimed at protecting investors, depositors, insurance takers, trustees, or in general financial consumers, or to safeguard the integrity and stability of the financial system. This Agreement shall not preclude any right or obligation of any Contracting Party under the Articles of Agreement of the International Monetary Fund.

EU-Canada Trade agreement (Ceta) (2017), Article 8.10.2 “A Party breaches the obligation of fair and equitable treatment referenced in paragraph 1 if a measure or series of measures constitutes: Denial of justice in criminal, civil or administrative proceedings; Fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings; Manifest arbitrariness; Targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief; Abusive treatment of investors, such as coercion, duress and harassment; or A breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with paragraph 3 of this Article.”

Colombia model bit (2017) Section [BB]-STANDARDS OF TREATMENT TO COVERED INVESTORS AND INVESTMENTS Article [##]-Physical Protection and Security “Each Contracting Party shall grant Covered Investors and Investments of the other Contracting Party physical protection and security in accordance with the minimum standard of treatment in customary international law.”

US Model BIT (2012), Annex B “The second situation addressed by Article 6 [Expropriation and Compensation] (1) is indirect expropriation, where an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure. (a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors: (i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred; (ii) the extent to which the government action interferes with distinct, reasonable, investment- backed expectations; and (iii) the character of the government action. (b) Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.” * This language also appears in U.S. FTAs with the following: Australia, Chile, Dominican Republic- Central America, Morocco, Singapore, and Peru.

Trans-Pacific Partnership (signed in 2016) Article 9.16 “Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.”

EU-Canada (CETA) (2017), Article 8.9 “1. For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity. 2. For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section. 3. For greater certainty, a Party’s decision not to issue, renew or maintain a subsidy: (a) in the absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy; or in accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy, does not constitute a breach of the provisions of this Section. 4. For greater certainty, nothing in this Section shall be construed as preventing a Party from discontinuing the granting of a subsidy or requesting its reimbursement where such measure is necessary in order to comply with international obligations between the Parties or has been ordered by a competent court, administrative tribunal or other competent authority , or requiring that Party to compensate the investor therefor.”

US-Korea (KORUS) (2012), Annex 11B “Except in rare circumstances, such as, for example, when an action or a series of actions is extremely severe or disproportionate in light of its purpose or effect, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, the environment, and real estate price stabilization (through, for example, measures to improve the housing conditions for low-income households), do not constitute indirect expropriations.”

Austria-Kazakhstan BIT (2012), Preamble “The Government of the Republic of Austria and the Government of the Republic of Kazakhstan, hereinafter referred to as "Parties", recognising that agreement upon the treatment to be accorded to investors and their investments will contribute to the efficient utilisation of economic resources, the creation of employment opportunities and the improvement of living standards; emphasising that fair, transparent and predictable investment regimes based on the rule of law both complement and benefit the world trading system; desiring to strengthen their ties of friendship and to promote greater economic co-operation between them with respect to investment by nationals and enterprises of one Party in the territory of the other; emphasising the necessity for all governments and civil actors alike to adhere to international anti corruption efforts, most notably the UN Convention against Corruption (2003); acknowledging that investment agreements and multilateral agreements on the protection of environment, human rights or labour rights are meant to foster global sustainable development and that any possible inconsistencies there should be resolved without relaxation of standards of protection; have agreed as follows:”

Alexander Uff T. +44 20 7655 5961 alexander.uff@shearman.com shearman.com