UK-Colombia Bilateral Investment Treaty

Philip Hollobone Excerpts

Wednesday 23rd October 2013 Westminster Hall

[Stephen Timms]

I will address the action plan on business and human rights in a couple of moments. My hon. Friend is absolutely right on the need for people to be able to obtain redress, and I would certainly welcome a comment from the Minister on that topic.

ABColombia, the consortium comprising Christian Aid, the Catholic Fund for Overseas Development, Oxfam and others, is particularly worried about the potential threat to land restitution. The UK-Colombia treaty risks making it impossible for Colombia to restore land that has been stolen from its previous owners, thereby potentially restricting the implementation of future peace agreements with the guerrillas and limiting reparations to victims of human rights violations. Land injustices have been at the centre of the long-running conflict in Colombia, as the Minister knows. I gather that a treaty with Ethiopia is likely to come up next, which raises a similar set of issues on land and rights, so there is a pressing case for carrying out a policy review.

My hon. Friend the Member for Wigan (Lisa Nandy) has reminded the Chamber of the action plan on business and human rights, which the Government published last month and which, as she says, has been widely welcomed. The action plan makes the point that investment agreements should,

“incorporate the business responsibility to respect human rights, and…not undermine the host country’s ability to…meet its international human rights obligations or to impose the same environmental and social regulation on foreign investors as it does on domestic firms.”

That is welcome reassurance. The review that I am suggesting would enable the Government to make good on that commitment in the specific context of bilateral investment treaties.

Secondly, there is a worry that investment rules in bilateral investment treaties could restrict the ability of Governments to set policies in the interests of their public. The investor-state dispute settlement mechanism allows foreign firms to sue Governments when and if they feel that their interests have been violated by a new law or policy. That is a pretty big limitation on the right of citizens to elect a Government to change the policy of the preceding Government.

I am chair of the trustees of Traidcraft, the fair trade organisation, which has drawn the issue to my attention—I declare that interest, although the role is unpaid. I share that concern about the restriction on the ability of developing country Governments to pursue policies that have worked elsewhere—such as land reform or requiring investors to give preference to local suppliers.

The concern, however, does not apply only in developing countries. The US tobacco firm, Philip Morris, is suing Uruguay and Australia over their anti-smoking laws. The company argues that warning labels on cigarette packs or plain packaging prevent it from displaying its trade mark effectively, causing a loss in market share. The threat of legal action against the UK under a bilateral investment treaty might be a factor in thinking about the introduction of plain packaging proposals here, so developing countries are certainly not the only ones in the frame. The US company Lone Pine Resources Inc. is demanding US $250 million in compensation from Canada for introducing a moratorium on fracking, because of environmental risk concerns. Corporations have used investor-state settlement provisions to challenge environmental, land use, energy and other laws.

Thirdly, I am worried that such claims bypass domestic courts and are heard in private—behind closed doors—in tribunals made up of three arbitrators, behind closed doors at the International Centre for Settlement of Investor Disputes. My hon. Friend the Member for Wigan reminded the House that any such decision is extremely difficult to change. In some instances, the existence of the cases is barely known at all; even when they are known, the reasons for decisions or the level of awards by a tribunal are not always disclosed.

There is concern that the system has led to bad decisions, which is particularly important given that an arbitration tribunal can make unlimited monetary awards. In 2012, dispute settlement compensations awarded to corporations ranged from US $2 million to, in the Ecuadorean case that I mentioned, nearly $1.8 billion; lots of pending claims total billions of US dollars. Disputes between multinational companies and Colombia under the UK-Colombia treaty would be confidential and heard by the international tribunal, despite the growing recognition worldwide, not least on the part of the UK Government, that transparency is vital to democratic processes, good governance and the rule of law.

Finally, there is at least a question mark about whether the treaties do, in fact, succeed in attracting additional foreign investment into signatory countries. A number of studies suggest no significant correlation between a country’s level of foreign direct investment—we all want to increase such levels in developing countries—and the decision to adopt treaties that include those broad investor protections.

I hope, therefore, that the Government will review their policy on bilateral investment treaties, in view of the lack of transparency, the use of the investor-state dispute settlement mechanism, the imbalance of rights and responsibilities, and the potential to undermine human rights in countries where investment is taking place. I am grateful to the Minister for his readiness to respond. I accept that part of the responsibility on the subject rests with the Department for Business, Innovation and Skills, but the Foreign and Commonwealth Office clearly has a key role as well. I look forward to what he has to say in response.

[Mr Philip Hollobone (in the Chair)]

The right hon. Gentleman timed that to the second!