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Can International Trade and Investment Law Protect Foreign Investments in the Resources Sector?

26 Pages Posted: 16 Nov 2012 Last revised: 3 Sep 2013

Andrew D. Mitchell

University of Melbourne - Melbourne Law School

James Munro

University of Melbourne - Melbourne Law School

Date Written: November 15, 2012

Abstract

This chapter provides a snapshot of how international trade and investment law can protect foreign investments in the resources sector. It first considers the applicability to the resources sector of international trade law, primarily found in the law of the World Trade Organization (‘WTO’) and various bilateral and plurilateral preferential trade agreements. These treaties contain important disciplines on non-discrimination and market access. The recent WTO dispute, China — Raw Materials, which involved export restrictions on bauxite, zinc, and other raw materials, demonstrates how such disciplines can apply to the resources sector. Although trade disputes are officially brought by States rather than by private actors, international investment treaties routinely provide investors with a direct mechanism to bring a claim against a State for breach of an investment treaty before an international tribunal. This chapter examines the typical protections contained in investments treaties, and how these can apply to the resources sector. For example, this chapter gives an assessment of whether increases in taxation affecting investments in the resources sector, or revocations of mining licences and permits, could constitute an unlawful or compensable ‘expropriation,’ and whether suspect administrative decisions or adverse changes in regulations could breach ‘fair and equitable treatment’ protections. The chapter also explores the extent to which breaches of contracts, agreements and understandings between investors in the resources sector and host States can be elevated to treaty breaches (and thus pursued before international tribunals). Finally, this chapter considers two examples of Australian investors in the resources sector pursuing international investment claims against India and Pakistan, noting some of the strategic considerations involved in making a claim, such as costs and parallel litigation.

Keywords: International Trade Law, International Investment Law, Resources, Mining, Licences, Permits, Royalties, Taxation, Investor-State dispute settlement, Expropriation, Fair and Equitable Treatment, FET, Umbrella Clauses, International Law

JEL Classification: K33, K34, F21, L71, L72

Suggested Citation

Mitchell, Andrew D. and Munro, James, Can International Trade and Investment Law Protect Foreign Investments in the Resources Sector? (November 15, 2012). [2012] AMPLA Yearbook 266; U of Melbourne Legal Studies Research Paper No. 644. Available at SSRN: https://ssrn.com/abstract=2176114

Andrew D. Mitchell (Contact Author)

University of Melbourne - Melbourne Law School ( email )

The University of Melbourne
Victoria, 3010
Australia
+61383441098 (Phone)
+61393472392 (Fax)

HOME PAGE: http://www.law.unimelb.edu.au/staff/Andrew%20Mitchell

James Munro

University of Melbourne - Melbourne Law School ( email )

University Square
185 Pelham Street, Carlton
Melbourne, Victoria 3010
Australia

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