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A summary of the main provisions of the
Multilateral Agreement on Investment (MAI)
as at October 1997.

Contains reference to the great importance which international investment has assumed in the world economy and the extent to which it has contributed to national development. Expresses the wish to establish a broad multilateral framework for international investment with high standards for the liberalization of investment regimes and investment protection and with effective dispute settlement procedures. [Resolves to implement this agreement in a manner consistent with environmental protection and conservation.] [Reaffirms commitment to the Rio Declaration on Environment and Development and Agenda 21, including to sustainable development.] [Renews commitment to the observance of internationally recognized core labour standards.] [Notes]/[Affirms support for] the OECD Guidelines for Multinational Enterprises (MNCs).

ģInvestorī: a natural person having the nationality of or permanently residing in a Contracting Party, or a legal person or any other entity constituted or organized under the applicable law of a Contracting Party. ģInvestmentī: every kind of asset owned or controlled, directly or indirectly, by an investor, including enterprises; shares, stocks etc; bonds, debentures, loans and other forms of debt; rights under contracts; claims to money and claims to performance; intellectual property rights; rights conferred pursuant to law or contract; any other property, and any related property rights.

Geographical scope of application
The land territory, internal waters, and territorial sea of a Contracting Party; The maritime areas beyond the territorial sea with respect to which a Contracting Party exercises sovereign rights or jurisdiction in accordance with international law.

National treatment and Most Favoured Nation (MFN) treatment
Each Contracting Party shall accord to investors of another Contracting Party and to their investments, treatment no less favourable than the treatment it accords [in like circumstances] to its own investors and their investments (National treatment rule). Each Contracting Party shall accord to investors of another Contracting Party and to their investments, treatment no less favourable than the treatment it accords [in like circumstances] to investors of any other Contracting Party or of a non-Contracting Party (MFN rule). Applies to all phases of investment - establishment, acquisition, expansion, operation, management, maintenance, use, enjoyment and sale or other disposition.

Each Contracting Party shall promptly publish, or otherwise make publicly available, its laws, regulations, procedures and administrative rulings and judicial decisions of general application as well as international agreements which may affect the operation of the MAI.

Each Contracting Party shall promptly respond to specific questions and provide, upon request, information to other Contracting Parties on the above matters.

Performance requirements
A Contracting Party shall not, in connection with the establishment, acquisition, expansion, management, operation or conduct of an investment in its territory of an investor of a Contracting Party or of a non-Contracting Party, impose, enforce or maintain any of the following requirements, or enforce any commitment or undertaking: to export a given level or percentage of goods or services; to achieve a given level or percentage of domestic content; to purchase, use or accord a preference to goods produced or services provided in its territory, or to purchase goods or services form persons in its territory; to relate in any way the volume or value of imports to the volume or value of exports or to the amount of foreign exchange inflows associated with such investment; to restrict sales of goods or services in its territory that such investment produces or provides by relating such sales to the volume or value of its exports or foreign exchange earnings; to transfer technology, a production process or other proprietary knowledge to a natural or legal person in its territory; to locate its headquarters for a specific region or the world market in the territory of that Contracting Party; to supply one or more of the goods that it produces or the services that it provides to a specific region or the world market exclusively from the territory of that Contracting Party; [to achieve a given level or value of production, investment, sales, employment, or research and development in its territory;] [to hire a given level of [local personnel] [nationals];] to establish a joint venture; [to achieve a minimum level of local equity participation.]

The obligation on a Contracting Party to accord national treatment and MFN treatment also applies to: all kinds of privatization, irrespective of the method of privatization (whether by public offering, direct sale or other method); and subsequent transactions involving a privatized asset.

Intellectual property
The MAI negotiators recognize a need to further examine the concept of intellectual property. The majority of delegations are understood to favour either excluding intellectual property from the national treatment and MFN treatment provisions, or enabling Contracting Parties to derogate from NT and MFN in a manner consistent with the TRIPS Agreement and, perhaps, other intellectual property agreements.

Not lowering standards
Two alternative texts exist for this provision. Both contain the statement that Contracting Parties should not waive or otherwise derogate from domestic health, safety or environmental standards, or labour standards, in order to encourage investment. The provisions are both framed in non-binding language.

Expropriation and compensation
A Contracting Party shall not expropriate or nationalize directly or indirectly an investment in its territory of an investor of another Contracting Party or take any measure or measures having equivalent effect except: for a purpose which is in the public interest, on a non-discriminatory basis, in accordance with due process of law, and accompanied by payment of prompt, adequate and effective compensation. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation occurred. The fair market value shall not reflect any change in value occurring because the expropriation had become publicly known earlier.

Each Contracting Party shall ensure that all payments relating to an investment in its territory of an investor of another Contracting Party may be freely transferred into and out of its territory without delay. Such transfers shall include, in particular, though not exclusively: the initial capital and additional amounts to maintain or increase an investment; returns; payments made under a contract including a loan agreement; proceeds from the sale or liquidation of all or any part of an investment; payments of compensation referred to above; payments arising out of the settlement of a dispute; earnings or other remuneration of personnel engaged from abroad in connection with an investment.

Protecting existing investments
[This Agreement shall apply to investments made prior to its entry into force for the Contracting Parties concerned as well as investments made thereafter.]

Dispute settlement: state-state procedures
Consultation, conciliation and mediation
One or more Contracting Parties may request any other Contracting Party to enter into consultations regarding any dispute between them about the interpretation or application of the Agreement. The requested Party shall enter into consultations within 30 days of receipt of the request. A Contracting Party may not initiate arbitration against another Contracting Party under this Agreement unless the former Contracting Party has requested consultation and has afforded the other Contracting Party a consultation period of no less than 60 days. If the Parties are unable to reach a mutually satisfactory resolution through consultations, they may have recourse to good offices or to mediation or conciliation under such rules and procedures as they may agree.

Any dispute between Contracting Parties as to whether one of them has acted in contravention of this Agreement, at the request of any Contracting Party that is a party to the dispute and has complied with the consultations requirement above, be submitted to an arbitral tribunal for decision.

The members of the arbitral tribunal shall be persons proposed by the Secretary General of the ICSID and appointed by the Parties to the dispute by agreement, or in the absence of agreement, by the Secretary General of the ICSID. Tribunal awards shall be final and binding between the parties to the dispute.

Dispute settlement: investor-state procedures
Scope and standing
These provisions apply to disputes between a Contracting Party and an investor of another Contracting Party concerning an alleged breach of an obligation of the former under this Agreement which causes loss or damage to the investor or its investment. An investor of another Contracting Party may also submit to arbitration any investment dispute concerning any obligation which the Contracting Party has entered into with regard to a specific investment of the investor, through an investment authorization granted by its competent authorities specifically to the investor or investment, or a written agreement granting rights with respect to certain categories of subject matters, on which the investor has relied in establishing, acquiring, or significantly expanding an investment. Such a dispute should, if possible, be settled by negotiation or consultation. If it is not so settled, the investor may choose to submit it for resolution: to any competent courts or administrative tribunals of the Contracting Party to the dispute; in accordance with any dispute settlement procedure agreed upon prior to the dispute arising; or by arbitration in accordance with the provisions of this Agreement. For investor-state disputes, arbitral tribunals shall comprise 3 arbitrators, one appointed by each of the disputing parties and a third appointed by mutual agreement. An enterprise constituted or organized under the law of a Contracting Party but which, from the time of the events giving rise to the dispute until its submission for resolution, was an investment of an investor of another Contracting Party, shall, for the purposes of disputes concerning that investment, shall have independent standing to lodge disputes under these provisions where such disputes have not already been submitted for resolution by the investor which owns or controls it. Arbitration awards shall be final and binding between the parties to the dispute.

Dispute settlement: applicable law
Disputes shall be decided in accordance with this Agreement, interpreted and applied in accordance with the applicable rules of international law.

General exceptions
Nothing in this Agreement shall be construed: to prevent any Contracting Party from taking any action [which it considers] necessary for the protection of its essential security interests [including those] taken in time of war, armed conflict [or other emergency in international relations]; relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; [relating to the production of arms and ammunition]; to require any Contracting Party to furnish or allow access to any information the disclosure of which [it considers] contrary to its essential security interests; to prevent any Contracting Party from taking any action in pursuance of its obligations under the UN Charter for the maintenance of international peace and security.

[Nothing in this Agreement shall be construed to prevent any Contracting Party from taking any action necessary for the maintenance of public order.] [The above provisions may not, however, be invoked by a Contracting Party as a means to evade its obligations under this Agreement.]

Temporary safeguard
A Contracting Party may adopt or maintain measures inconsistent with at least its obligations under this Agreement in relation to National Treatment and Transfers (though not MFN): in the event of serious balance-of-payments and external finance difficulties or threat thereof; or where, in exceptional circumstances, movements of capital cause, or threaten to cause, serious difficulties for the operation of [economic,] monetary or exchange rate policies Any such measures shall be temporary and shall be eliminated as soon as conditions permit. Such measures shall be subject to review and approval or non-approval within 6 months of their adoption and every 6 months thereafter until their elimination.

Lodging of country specific reservations
Contracting Parties may lodge reservations to the Agreement at the time of accession, in relation to existing non-conforming measures, or the continuation or prompt renewal of any such non-conforming measures. ėStandstillķ results from the prohibition of new or more restrictive exceptions. It does not apply, however, to measures legitimately taken under the general exception or temporary safeguard provisions. ėRollbackķ refers to the liberalization process leading to the reduction and eventual elimination of non-conforming measures. Any new liberalization measures would be ėlocked inķ, so they could not be rescinded later.

The OECD Guidelines for Multinational Enterprises The OECD Guidelines for MNCs are to be annexed to the Agreement, but will remain non-binding.

PNP November 1997 BRIEFING PAPER: Multilateral Agreement on Investment

For more information, please contact PDHRE:
The People's Movement for Human Rights Education, 526 West 111th Street, New York, NY 10025
tel: 212.749-3156; fax: 212.666-6325; e-mail: pdhre@igc.org