2012 US Model BIT released | Practical Law

2012 US Model BIT released | Practical Law

The US government has released the 2012 US Model Bilateral Investment Treaty (BIT).

2012 US Model BIT released

Practical Law UK Legal Update 9-519-0707 (Approx. 3 pages)

2012 US Model BIT released

by PLC Arbitration
Published on 24 Apr 2012 • International, USA (National/Federal)
The US government has released the 2012 US Model Bilateral Investment Treaty (BIT).
On 20 April 2012, the US government released the 2012 US Model Bilateral Investment Treaty (2012 Model). This follows a review undertaken by the US government in 2009 to amend the 2004 US Model BIT (see Legal update, United States Reviews Model BIT).
No significant changes have been made with regards to the provisions on investment arbitration or substantive investment law protections. The principal changes are as follows:
  • A footnote has been added to Article 2.2(a) explaining that the application of the 2012 Model "to a state enterprise or other person when it exercises any regulatory, administrative, or other governmental authority delegated to it by that Party" extends to delegation by a wide variety of means including legislative grant, government order, directive or other action.
  • Article 8 (which precludes the imposition of performance requirements by the host state) has been expanded to include conduct by a host state to prefer local technology against "technology of the Party". This term is defined as including technology owned or held under exclusive license by an investor of the other party.
  • New provisions have been included requiring the host state to allow persons of the other state to participate in the development of technical and similar standards (Article 11.8(a)). This particular provision is enforceable by inter-state dispute resolution.
  • Provisions addressing the publication of regulatory actions and transparency in the host state's regulatory and administrative matters have been expanded (Article 11).
  • Three minor changes were made regarding the relevance of the BIT to financial services institutions and systems:
    • Clarification that the exempted category of "measures relating to financial services for prudential reasons" (Article 20) extends to measures to preserve the "safety and financial and operational integrity of payment and clearing systems".
    • The incorporation of a provision from the US-Rwanda BIT that entitles a respondent state to require the tribunal to promptly decide the issue of the application of the prudential measures and similar financial services exclusions (Article 20.(3)(e)).
    • The incorporation of a provision the US-Rwanda BIT that makes clear that the BIT does not prevent the adoption or enforcement of measures necessary to secure compliance with financial services laws and regulations that would be otherwise inconsistent with the BIT (Article 20.8).
  • The new BIT also includes greater environmental and labour obligations.