This workshop took place on Thursday 28 June. A public record of contributions is available at the foot of the page.

Workshop Abstract

The proliferation of bilateral investment treaties has reshaped global investment governance. Certain standards of investment protection have emerged as dominant, despite the lack of any centralised global negotiations. Instead of a single global body, thousands of similar treaties are knit together through Most-Favoured Nation (MFN) clauses and informal precedence in investor-state arbitration.

Many countries are concerned that their obligations in these bilateral investment treaties may constrain their ability to use prudential or other regulatory measures to deal with the current global economic crisis. Are these concerns justified?  More specifically, do some bilateral investment treaties prevent the use of capital flow management measures?

Recently, International Monetary Fund (IMF) policy on capital flow management measures, more widely known as capital controls, has evolved.  In the last few months, the executive directors of the IMF have acknowledged these measures can be useful in managing the vulnerabilities that arise with cross-border capital flows.

Do bilateral investment treaties that employ a ‘North American’ model with binding liberalisation commitments preclude the use of capital flow management measures?  Furthermore, if a state enters into one bilateral investment treaty that precludes the use of capital flow management measures, does the MFN clause in their bilateral treaties extend this commitment to all their treaty partners, effectively multilateralising their liberalisation?  Finally, to what extent do national security exceptions or other exceptions provide a justification for states using capital controls during financial emergencies?

This workshop aims to bring together a small, select group of experts to examine these and other issues in targeted, frank discussions. This workshop was organised to clarify questions that emerged in on-going negotiations.   The questions that bilateral investment treaties raise for capital flow management measures are exceptionally timely, and one of the most interesting and important governance challenges posed by global investment flows.