The recent hullabaloo about the signing of the controversial Pak-US Bilateral Investment Treaty (BIT) by the Minister of State and Chairman of Board of Investment, Mr Saleem H. Mandviwalla, in the absence of consultation with the stakeholders, including the Foreign Office, has once again established how the international law is used as ‘pressure tool’ in international relations by a stronger state to dictate its agenda, secure its own interests as well as to protect the interests of its subjects vis-à-vis the weaker state.
The Pak-US BIT is not the first investment treaty of its kind to seek significant legal protection of foreign investors and their assets in a host state. According to a 2007 United Nations Conference on Trade and Development (UNCTAD) review of BITs highlighting the trends in investment rule-making, there were over 2,500 BITs by the end of year 2005; and Pakistan itself has concluded bilateral treaties with some 47 countries already.
Most, if not all, provisions of the Pak-US BIT, therefore, are very common investment treaty provisions. That are generally found in the texts of all BITs, such as the free transfer of funds relating to the investment in and out of the territory; or the requirement of paying, ‘prompt, adequate and effective compensation’ to investors by the host state should their assets be expropriated or nationalised.
Given, however, the ‘contractual nature’ of BITs, the US has indeed attempted to negotiate beyond the general standards of treatment and protection offered to foreign investors under international investment law, and has attacked the sovereignty of Pakistan all over again by demanding Islamabad to seek prior approval from Washington before finalising any export, import or taxation related policies. This again exposes how international legal tools, such as BITs, enable the stronger states to exert pressure and negotiate with their weaker but indispensable counterparts.
However, the story does not just end there. The international law in general and international investment law in particular has this innate quality of being ‘binding against all’; for it advocates the notion of ‘Most Favoured Nation Treatment’. This international investment law principle requires investors from one country to be given the same favourable treatment as investors from any third country, so that a level playing field and equality of competitive opportunity can be secured for foreign investors on grounds of non-discrimination. This principle is found in almost all BITs and, in any case, is part of the Customary International Law that is binding on all states whether or not they have expressly included it in their bilateral agreement. Hence, any provisions, or favourable terms that Pakistan may be obliged to extend to the US, will automatically be extended to all those 47 other states with which it has a bilateral investment treaty through the ‘Most Favoured Nation Treatment’ principle.
It is, thus, time to reconsider the realm of international law, as developed in the aftermath of World War II, to collectively voice the ‘interests’ and no longer the ‘concerns’ alone of the developing countries, and ensure a level playing field between the north and the south in the true sense of the term. Or else, the international law is likely to remain a tool for enforcing the lopsided agendas and interests of the capital-rich countries.
The first step in this direction is to develop an in-depth understanding of the international legal regime so that we can effectively appreciate the correct dimensions of the international legal tools, such as the BITs. Simultaneously, we need to build and invest in our own domestic production capacities so that external aid and economic reliance is diminished.
At the international level, we need to join hands and collectively add to the voice of those developing nations that are taking a stand for their national policies and interests, such as Bolivia. For example, it denounced its consent to the submission of any investment disputes to the International Centre for Settlement of Investment Disputes (ICSID), which has in recent past notoriously taken some very controversial decisions as the one in the Emilio Augustin Maffezini v Kingdom of Spain case, thereby further expanding and extending the scope of already lopsided international investment law standards of treatment and protection for foreign investors.
Ultimately, of course, it is the political will and the constitutional support that can safeguard the interest of this country during international negotiations. An informed civic society, however, helps in creating that necessary domestic pressure and scrutiny that the government officials may need in order to perform their democratic mandate. It is, therefore, hoped that the media and the judiciary will continue to educate the masses and play an effective role in curbing any excesses of the executive, particularly when national interests are at stake. The least, in this regard, that we can ensure is that all constitutional and legal procedures are followed and that no stakeholders are left outside the consultation process before international agreements and obligations are undertaken by the officials.

n    The writer holds LLB (Hons) and LLM in Law and Development from the University of London. She is currently working as an Independent Investment Law Consultant in Lahore.
    Email: nidamahmood@yahoo.com