Investment treaties and citizens' power: lessons from experience

There are growing calls to reform international investment law, but how can we ensure that the people affected by these decisions are part of the debate?

Lorenzo Cotula's picture
Insight by 
Lorenzo Cotula
Lorenzo Cotula is principal researcher (law and sustainable development) in IIED's Natural Resources Group and team leader, legal tools
07 September 2015
Negotiators on the Transatlantic Trade and Investment Partnership discuss the treaty in Brussels in May 2015 (Photo: European Parliament, Creative Commons, via Flickr)

Negotiators on the Transatlantic Trade and Investment Partnership discuss the treaty in Brussels in May 2015 (Photo: European Parliament, Creative Commons, via Flickr)

International law governing foreign investment is at a crossroads. The proliferation of investment treaties and arbitrations has made international investment law one of the most dynamic branches of international law, and an important part of the legal architecture underpinning economic globalisation.

But international investment law is also a contested field: some experts and campaigners have questioned substantive standards and dispute settlement mechanisms, and some commentators have talked of a "legitimacy crisis" or "backlash" against the investment regime.

There have been vocal calls for reform, and a multilateral dialogue on the "transformation" of the investment treaty regime is starting to emerge.

There is also some uncertainty about future directions in treaty making. Several states have terminated some of their investment treaties. Others are negotiating "mega treaties", potentially creating some of the most ambitious investment treaties ever.

Others have sought to "recalibrate (PDF)" their treaties, nuancing language to shift the balance between multiple policy goals. Yet others have explored entirely novel approaches, increasing diversity in the international treaty landscape.

This is then a particularly important point in time for shaping the future of international investment law. But while debates about investment treaties are often framed in technical and legal terms, and are dominated by legal professionals, the choices on whether to conclude investment treaties, and in what form, are eminently political.

These political dimensions raise questions about who decides, and how public decisions are made.

Still too little transparency and oversight

Many treaty negotiations take place with little transparency or citizen participation. There is often little public debate about their pros and cons, particularly in low-income countries. Even legislators often play a minor role in treaty making. 

Given the potentially far-reaching policy implications of investment law, this low level of public oversight creates real challenges for democratic governance and accountability. Other areas of international law have also evolved with limited public participation. But the extensive involvement of civil society and citizens' groups in the negotiations shaping international environmental law shows that it is possible to open up international law making.

There are some signs of change. Some parliaments are taking a more active role, for example providing clearer guidance on investment treaty policy. And while public consultations on proposed negotiations remain rare, they are becoming more common.

The European Commission, for example, held a (carefully circumscribed) online consultation on the investment chapter of the proposed United States-European Union Transatlantic Trade and Investment Partnership (TTIP). There have been growing calls for parliaments to scrutinise investment treaties before they are ratified.

And in many parts of the world, especially in richer countries, civil society and citizens' groups are increasingly scrutinising treaty negotiations, intervening in arbitrations between investors and states, catalysing grassroots movements and promoting public debate.

This growing citizen engagement may help to rethink important aspects of international investment law, and to strengthen its perceived legitimacy.

The case for international lesson sharing

While it may be too early to assess what approaches work where, and under what conditions, there are already lessons that can be shared.

Take the recent example of civil society advocacy on Malaysia's participation in the Transpacific Partnership (TPP) negotiations, where citizens demanded that they be involved in decision making. The TPP's investment chapter attracted particular attention. States negotiate investment treaties, and – depending on political systems – they provide the primary spaces for democratic accountability.

International investment law also involves considerable authority being delegated to investor-state arbitral tribunals. In El Salvador, civil society was able to access this process, submitting evidence to an investor-state arbitration related to a mining project. This shows how local to global civil society alliances can bring community perspectives to international arbitration processes.

And as multiple states are grappling with similar challenges, there is considerable room for international lesson sharing and alliance building. So the sites of citizen action transcend the confines of nation states.

The Malaysian case illustrates international alliance building at multiple levels – from sharing information and analysis among civil society groups in the 12 countries involved in TPP negotiations, through to joint letters calling for greater transparency signed by parliamentarians from different countries.

Diverse actors and targets, and the value of local-to-global alliances

These two examples highlight the diversity of possible citizen engagement strategies – from engaging with individual arbitrations, to promoting systemic change in treaty making policies.

They also reflect some of the dilemmas that civil society can face – engaging with a specific arbitration or negotiation, for example, might be perceived as lending legitimacy to a process or system that civil society organisations might not want to legitimise.

Significantly, harnessing law and politics and combining different approaches were important in both cases. In Malaysia, civil society advocacy ranged from public campaigning to directly engaging with government, and showed the value of creating alliances with politically influential social groups. In El Salvador, engagement with the legal process was also combined with social mobilisation to ensure key messages were heard.

Both experiences highlight the relevance of local-to-global alliances. In the El Salvador case, civil society engagement was underpinned by an alliance including grassroots groups based in the affected mining areas. National civil society turned local issues into national policy debates, while international organisations provided the legal expertise and campaigning clout to take the issue to a global level. 

In Malaysia, the diverse national coalition advocating on the TPP includes consumer groups, public health organisations and trade associations, creating a broad constituency.

But coalitions of diverse interests can also be fragile. Promises can appease issue-specific concerns and take the wind out of activists' sails. Malaysia's apparent determination to sign the TPP in the face of civil society advocacy shows the difficulties of achieving policy change on such politically sensitive issues.

Research can play an important role in facilitating lesson sharing and citizen debate. The combination of sensitive political choices and complex technical issues calls for both informed and inclusive debate. In turn, this requires rigorous analysis of multiple considerations involved in concluding, renegotiating or terminating investment treaties.

There is much scope for new collaborations that harness research and advocacy for greater citizen influence over policy choices affecting the future of international investment law.

Lorenzo Cotula ([email protected]) is principal researcher (law and sustainable development) in IIED's Natural Resources Group and team leader, legal tools.

Further resources