Blue Chi’s

(Photo Credits: anjan58)

Oman had signed bilateral investment treaties (BITs) with many countries from all around the world, the latest was ratified today with the Netherlands.

Not a lot of people know what these are. In fact, many governments sign them without knowing what they mean, some think of their signature is just part of a celebratory event that takes place when a minister from a foreign state visits the country and just think of them as a meaningless MOU that has no legal implications.

A Bilateral Investment Treaty is a treaty by which a government promises another government to protect the investment of national of the second country in the first country in return of reciprocal treatment. The text of these treaties is usually quite short and it’s usually less than ten pages long, but the main principles of it are national treatment, free transfer of funds, full protection and security, and protection against expropriation.

While many of these principles might already be existent in national laws of countries (for example, Oman provides protection for foreign investment in its Foreign Capital Investment Law 104/94), the protection of BITs differs in that it could exceed the national level of protection, it could even exceed the protection granted for local investors (e.g. in the case of ‘full protection and security’ which is not usually granted by countries for any investor local or foreign), and the most significant impact of it is that it gives a foreign investor the right to take an action against the host government for a breach of the treaty in International Arbitration. This right will exist regardless of whether there was any contractual arrangement between that government and the investor, and it will surely not be available for local investors. 

Such right is risky for governments, as they can be inadvertently in breach, for example, of expropriation indirectly, and then could be sued for millions of dollars at an international arbitration center (horror stories happened to the governments of Pakistan and Turkey).

There are no known records of any investor taking an action against the Omani government, however, last year, a Omani investor successfully was awarded damages of USD $24 million against Yemen by relying on the Bilateral Investment Treaty between Oman and Yemen.

BIT are scary agreements and there is no proof at all that they contribute to the attraction of foreign investment to a country. Many free trade agreements (such as Oman-US FTA) also include a chapter on investment with very similar provisions.

In Oman, the Ministry of National Economy coordinates the negotiation process of bilateral investment treaties with other countries. The Ministry of Legal is responsible for reviewing them prior to signature to ensure their compliance with national laws.

I’m back in town, got back from Egypt last night, had to go directly to Sohar, came to Muscat a couple of hours ago. I hated Egypt, I don’t think that I’ll ever go again. The conference was the worst ever I’ve been in terms of organization, the seating was so messed up I don’t even know where to start, we didn’t have water to drink, I asked for some and I was turned down, the food was the closest thing I would imagine they would be giving in prisons – it was so horrible, you guys have no idea.

Half the audience also had no idea what the event was about, they thought it was about investment promotion in the Arab region or something like that, when it was about the risks of international investment treaties – something COMPLETELY DIFFERENT. The UNCTAD speakers were the best as usual, an excellent non-UNCTAD Egyptian lawyer also discussed the first case ever to involve a Omani investor. It was very interesting.

However, that is not to say that I had fun in Egypt or anything like that, every single person on the street seemed like he would do anything to rob money off a foreigner. It was really horrible. I also had the very unfortunate incident of using a faulty ATM machine in the airport that claimed it gave me the money I attempted to withdrew and gave me a statement confirming that it did when nothing came out! It was the airport right when I came, and through the mess and noise of the airport, I just decided to take my freaking statement and just use another machine. I checked my bank account today and the amount was deducted. I do not know if I can get my money back, but will try to contact Bank Muscat even though I doubt they can do anything.

I hate Egypt and I’m never going back to it again.

I’ll be attending a conference on international investment dispute settlement in Cairo later this week (Wednesday and Thursday). The event is organised by the secretariat of the United Nations Conference on Trade and Development (UNCTAD) jointly with the Cairo Regional Centre for International Commercial Arbitration. The conference will discuss the challenges faced by Arab countries in the area of bilateral investment treaties. This is relevant to our work at MOLA because we are responsible for reviewing all international agreements prior to their signed by our country.

I’ll be traveling on Tuesday and I’ll d be back on Friday.

I will be attending a 10-day training programme in Jordan right after Eid. The event is organised by the investment section of the Islamic Development Bank organisation and the United Nations’ UNCTAD. The program will cover international investment agreements and dispute settlement issues related to them (mostly arbitration).

One of our duties at MOLA is to review investment agreements that government goes into, and one of my colleagues at work is part of the negotiating committee that is responsible for bilateral investment agreements with other countries, so this should be very interesting. I am required to submit a 2-3 page brief on the BIT format Oman uses, which I found, but did not manage to examine properly yet. I am supposed to submit this within five days, I will try to do it tomorrow.

The program is going to be pretty extensive, 9am to 6pm daily with one day off through-out, so I am not sure how much sightseeing I will be able to do, but it is always nice to have a break from work every now and then.

Will keep up you updated on how this goes.