UK-Colombia Bilateral Investment Treaty

Debate between Lisa Nandy and Stephen Timms

Wednesday 23rd October 2013 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I am grateful to Mr Speaker for selecting this debate.

Bilateral investment treaties are a long-standing mechanism to protect foreign firms and investors undertaking risky overseas investment from the danger of expropriation or policy changes in the destination country that could reduce the financial return from those investments. Bilateral investment treaties have generally been seen as benign, technical instruments, but developments in their use in the past 10 years or so have raised doubts about their benign character. Those doubts certainly arise in the case of the UK-Colombia bilateral investment treaty, which I understand is due to be ratified in the next few weeks. I will air some of those doubts in this debate and press the Minister to clarify the Government’s thinking in response to some of the concerns that are being raised.

Bilateral investment treaties allow investors to sue elected Governments if policy changes adversely affect their profits, but neither the host Government nor the communities affected by the investment have reciprocal rights. There is at least a question on whether that balance is correct.

Last October, under a bilateral investment treaty, a tribunal established by the International Centre for Settlement of Investment Disputes, which is part of the World Bank, fined Ecuador $1.8 billion—a sum equal to Ecuador’s entire annual education budget—for terminating a contract with Occidental Petroleum Corporation after reaching the view that Occidental broke Ecuadorian law when selling its production rights. I notice that on 30 September 2013, the tribunal decided to stay the enforcement of that fine for the time being, but it is not clear that handing a technocratic tribunal the power to impose fines in that way is necessarily the right thing to do.

By the end of 2012, corporations had launched more than 500 cases under bilateral investment treaties against 95 Governments. Compared with the preceding three decades, the number of disputes since the year 2000 has risen two-and-a-half-fold. The treaties seem to be evolving into something rather different from what they were originally intended to be. We need to reflect on how we want the treaties to be used, on what is appropriate to put into them and, indeed, on when it is appropriate to enter into such a treaty.

Governments across the world are now reviewing their policy on bilateral investment treaties. I understand that Norway and South Africa are terminating their treaty, and Australia and the US have decided to restrict the scope of their treaty. I am delighted to see the Minister in his place this afternoon as I know he has other pressing business, and I hope he will use this debate to set out the British Government’s thinking. I would welcome a review in the UK along the same lines as we are seeing elsewhere.

The UK-Colombia bilateral investment treaty will be laid before Parliament shortly and will provide far-reaching rights to foreign investors in Colombia. I am worried that the treaty might not take into account the potential risks it poses to securing human rights in Colombia. The Minister knows very well the human rights position in that country. In the first six months of this year, 11 trade unionists and 37 human rights activists were killed—nobody has been charged in relation to any of those killings. Over the summer there were strikes and protests across Colombia, and 16 demonstrators were killed by the police and the army, with more than 90 people imprisoned. Paramilitary groups continue to operate widely. There is already substantial opposition on human rights grounds to the ratification of the EU-Colombia free trade agreement.

I ask the Minister to take the opportunity presented by the forthcoming ratification, and indeed by other negotiations for new investment treaties at EU level, to consider whether it is appropriate to have a general review of UK policy towards bilateral investment treaties.

I have three areas of concern about the current use of bilateral investment treaties that I think make a review necessary. First, it is not clear that the human rights impact of such treaties is in line with the UK Government’s policy. That is a particularly pressing concern in the case of Colombia, where the human rights situation is so precarious, particularly in relation to workers’ rights and land rights.

According to the United Nations High Commissioner for Human Rights, Colombia has the largest number of internally displaced people in the world after Sudan—there were 5.7 million internally displaced people in Colombia by the end of the 2012—largely due to land-grabbing around mineral and resource-rich sites. Colombia has enacted a land restitution law to restore more than 2 million hectares of land to people from whom it had been wrongly taken, but that restoration has not yet taken place. Human Rights Watch reported last month that only one family have to date had their land returned.

There is serious concern that a bilateral investment treaty could make the implementation of land reform even more difficult; it could trigger demands from foreign investors for compensation if, for example, cases were brought forward in which land occupied by an investor that had previously been appropriated from someone else and then sold to the investor was restored to its original and rightful owners. Such processes could potentially scupper the prospects for land restitution, which is widely recognised as key to Colombia’s future stability.

[Lisa Nandy (Wigan) (Lab)]

I am grateful to my right hon. Friend for giving way, for the powerful case he is making and for bringing this debate to the House. The recent UK action plan on business and human rights was strongly welcomed because of some of the difficulties that he raises, but it is unfortunately silent on remedy and redress for victims of such abuses. Indeed, recent legislation has restricted the ability of victims of actions by UK companies overseas to access justice through the UK courts. Does he agree that it is essential that we build on the momentum that the Government and others have created to ensure adequate redress when bilateral investment treaties are breached, and that otherwise we risk undermining the host country’s ability to meet its international human rights obligations? Would he also welcome a response from the Minister on that, either today or at a later date?