Jasmina Roskić, Head of the Department for agreements on mutual encouragement and protection of investments in the Ministry of Foreign and Internal Trade and Telecommunications attended a Seminar for economies in transition which dealt with the new trends in investment policy, with a special emphasis on bilateral agreements on investment protection, which was held from October 1 to October 4, 2013, in Sarajevo.
During the seminar, the UN’s Global Sustainable Development Goals were presented, as well as the link between the established legal framework for the implementation of the investment policy of the countries in transition and sustainable development objectives.
As the representative of the Republic of Serbia, Jasmina Roskić spoke about the experiences of this country in the negotiation and conclusion of bilateral agreements on investment protection. Presenting the standard model for Agreements on mutual encouragement and protection of investment as a model for all the bilateral negotiations of the Republic of Serbia, Roskić referenced certain elements which were, based on the experience gained during the negotiations, added to the basic text of the model of said Agreement. In this sense, special emphasis was placed on the presented definition of the term “investment” which was significantly revised compared to the basic text of the draft of the Agreement. The revised definition of investing was significantly narrowed in terms of the protection of the rights of foreign investors which can no longer be extended to commercial operations.
Otherwise, the seminar pointed out that some models of the transition countries have very broad definitions of the terms investment and investor, which gives the opportunity for foreign investors to seek the protection of their rights for “anything and everything” before international arbitration. It was pointed out that in these disputes, the arbitral tribunal takes a stand on a case by case basis, most often to the benefit of investors.
When it comes to the definition of the term investor, in Serbia, the accepted definition is that which excludes the so-called “dual citizenship.”
It was also noted on the Seminar that it is important when the investor is a legal entity that its head office be in the territory of one of the contracting parties, and that it undertake effective business activities in the territory of that party, in order to prevent the so-called “treaty-shopping” and “mail-box companies” which only fictitiously realize certain business activities, from being included under the provision of protecting the rights of foreign investors provided by the provisions of the Agreement.
As for expropriation, in the Agreement that Serbia uses as a standard model, a clause is inserted stating that it should always be in the public interest, based on the Law and carried out according to the procedure prescribed by the Law. If such expropriation takes place, the investor is entitled to interest at the market rate, which is calculated from the date of expropriation until the date of payment. When evaluating the expropriated investment, the market value of the investment is determined on the date the expropriation is made. Jasmina Roskić pointed out that during the negotiation of bilateral agreements on mutual encouragement and protection of investments, the negotiators of the Republic of Serbia do not accept the insertion of the so-called “umbrella clause” in the text, which was evaluated as a good decision. Accepting the umbrella clause puts the state in a position that it must fulfill its obligation under private law contracts as an international obligation. Especially positively evaluated were the articles relating to the socially responsible behavior which the Republic of Serbia introduced into certain texts of the Agreements with certain countries, and which, by joint assessment of the participants, represent a good example of the way the global UN goals can be incorporated into the national legislation and the policy of attracting investments. Finally, it was concluded that agreements of this kind are part of the general investment policy of the country and that they themselves do not attract foreign investors, although they represent a positive step in that direction. They are just part of the general improvement of the business environment of a country with the aim of attracting foreign investment.
By participating in the aforementioned seminar, the representative of the Ministry of Foreign and Internal Trade and Telecommunications had the opportunity to become familiar with the international standards and the experiences of other countries in the field of negotiation and conclusion of Agreements on mutual encouragement and protection of investments. Particularly important was the information concerning the manner of narrowing down the scope of protection provided to foreign investors on the basis of the provisions of this Agreement, all with the purpose of avoiding investment disputes submitted to international arbitration. In that sense, a new, revised model agreement on mutual encouragement and protection of investments of the Republic of Serbia should be prepared.
In addition to the representatives of the Republic of Serbia, the above seminar, organized by UNCTAD (UN Conference on Trade and Development), was attended by the representatives of other countries in transition, as well as countries in the region, namely: the host country (Bosnia and Herzegovina), Croatia, the Czech Republic, Slovakia, Albania, FYR Macedonia, Ukraine, the Russian Federation, Armenia, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkey, Turkmenistan and Uzbekistan. Besides the representatives of the UNCTAD secretariat, the representatives of eminent legal offices with the most experience in legal representation in resolving investment disputes submitted to international arbitration, participated in the proceedings of this seminar, namely: Allen&Overy LLP, London; King&Spalding LLC, London, and Shearman&Sterling LLP, London, a representative of the Cairo Regional Centre for International Commercial Arbitration, a representative of the International Institute for Sustainable Development, as well as representatives of the European Commission and the UN High Commissioner for Human Rights from Geneva.
