On August 16, 2017, trade representatives of the United States, Mexico and Canada will convene in Washington, DC for the first of seven scheduled rounds of negotiations in relation to the North American Free Trade Agreement (NAFTA). The negotiations have been covered extensively in national and international media and, given the scope of the interests at stake, we expect that coverage to only intensify.
To provide practical insights to stakeholders in key industries, we have focused this update on the context of the negotiations, the interests and objectives laid out by the states in advance of the talks, and our strategic view of what interested observers should watch for. We will periodically publish sector-focused insights as the negotiations develop. Continue reading
With effect from 8 August, the Government has introduced significant new reporting requirements in relation to EU asset freeze regimes. Previously, only businesses in the financial sector were subject to the obligations, found in UK financial sanctions instruments, to report specified information to the Office of Financial Sanctions Implementation (“OFSI“) in Her Majesty’s Treasury (“HMT“). From 8 August, further sectors, including auditors, external accountants, tax advisers and lawyers, have been brought within the scope of these obligations and may commit a criminal offence if they fail to comply with the relevant reporting requirements.
The European Union Financial Sanctions (Amendment of Information Provisions) Regulations 2017 (the “Regulation“) implements this change, and applies in respect of information received on or after 8 August.
OFSI has updated its guidance (the “Guidance“) on financial sanctions to take account of this change. A number of other amendments have also been made to the Guidance, and we will report on these in a separate briefing. Continue reading
On 2 August 2017, the UK Government published its response to the public consultation on the UK’s future legal framework for imposing and implementing sanctions after the UK’s exit from the European Union (see our previous blog post).
The response sets out detailed answers to questions raised during the consultation, outlining the proposed powers for the imposition of financial and trade restrictions and the designation of individuals, as well as the proposed procedures under which such powers will be exercised. The Queen’s Speech on 21 June 2017 confirmed the Government’s intention to introduce a Sanctions Bill during the current Parliamentary session (2017-2019), with further guidance promised on certain issues in due course.
The United States will lobby for changes to the investor-state dispute settlement (“ISDS”) provisions of the North American Free Trade Agreement (“NAFTA”) in the upcoming discussions to renegotiate the regional treaty.
ISDS reform is one of several “negotiating objectives” announced last month by the Office of the United States Trade Representative (the “USTR”), the federal agency with responsibility for US trade negotiations. The disclosure was made public in accordance with a 2015 statute that requires the USTR to release objectives at least 30 days before the start of formal trade negotiations. The NAFTA talks are set to begin in Washington D.C. on August 16.
On the agenda are modest proposals for increased transparency in the NAFTA ISDS process, such as the introduction of mandatory public access to NAFTA arbitration hearings, and submissions, and awards. Those amendments would be broadly in line with the recent trend toward greater public transparency throughout the investment treaty space. A more striking departure from current practice is suggested by the proposed introduction of a “right” of “non-governmental entities . . . to request making written submissions to a panel.” Continue reading
On 6 July 2017 the EU and Japan announced an agreement in principle on their Economic Partnership Agreement (“EPA“). The scale of this agreement is eye-popping: once in effect the EPA will cover nearly 40 percent of all goods exports, 10 percent of the Earth’s population, and about 30 percent of global GDP. The breadth of goods covered by the EPA will be similarly substantial and includes agricultural and food products, the forestry sector, industrial products, the automotive sector, electronics, and services. While some tariffs, such as those on wine, will disappear from the moment the EPA enters into force, other tariffs – including those on imports of Japanese automobiles to Europe and imports of European chocolates to Japan – will disappear over a number of years. The net effect will be to remove tariffs from 99 per cent of all goods traded between the EU and Japan with one study suggesting consequent increases in EU exports to Japan of 34% and Japanese exports to the EU of 29%. Continue reading
Prior to the next round of Brexit negotiations, on 13 July 2017 the Government published a position paper on the privileges and immunities enjoyed by the EU institutions, agencies and representatives in the UK in the context of Brexit.
The paper recognises that, even after the UK's withdrawal from the EU scheduled for 2019, some EU institutions and agencies will remain in the UK. For some this will be temporary, while they wind down their activities. But the paper also acknowledges the expectation of a continued future EU presence in the UK, including for example in the form of an EU delegation.
Privileges and immunities which currently exist under EU law (namely, Protocol 7 to the Treaty on the Functioning of the European Union), will no longer apply after UK exit when the UK is no longer party to the EU treaties. With this in mind – and consistent with the UK's desire to enter a "new, deep and special partnership" with the EU – the Government recognises that some privileges and immunities will need to be granted to the EU to facilitate that partnership, and expects that this should be reciprocal, covering also UK activity within the EU.
Herbert Smith Freehills' consultant Antonio Pastor is pleased to announced the release of his book 'Delimitation of maritime boundaries between states. Insular formations and low-tide elevations' (TIRANT LO BLANCH, Valencia, 2017).
Commenting on the book, Antonio said: "There is an economic dimension of this subject matter. The settlement of maritime boundaries can have a significant impact on the economic decisions of States as well as of commercial actors. Businesses need to know which State exercises sovereignty or jurisdiction over an insular formation, and therefore to grant commercial concessions in relation to that territory."
An ICSID tribunal has rejected a State's application for security for costs in circumstances in which the other party had third-party funding in the form of ATE insurance which specifically provided for cover of the State's costs.
Italy's request for security for costs
The application formed part of arbitral proceedings brought by Eskosol S.p.A. in liquidazione ("Eskosol") under the Energy Charter Treaty and the ICSID Convention against the Italian Republic ("Italy"). Italy sought security for costs in support of its ICSID Arbitration Rule 41(5) application for summary dismissal of Eskosol's claims on the basis that they are manifestly without legal merit.
As formal Brexit negotiations have now started, Herbert Smith Freehills is pleased to announce the launch of its new Brexit Notes blog, where you will find articles and updates on the latest Brexit developments.
As well as reporting on new developments going forward, Brexit Notes has been pre-populated with a selection of articles and posts. You can subscribe to the blog to receive notifications by e-mail as soon as items are posted, or you can visit the site whenever you choose.
On 3 December 2016, Morocco and Nigeria signed a new bilateral investment treaty (the "BIT"), with the overarching aim of strengthening "the bonds of friendship and cooperation" between the two States. The BIT (available here) is yet to be ratified and to enter into force.
The BIT takes an interesting and in some ways innovative approach to the balance of rights and obligations as between investors and the respective host States, placing emphasis on the promotion of sustainable development and expressly safe-guarding the State's discretion to take measures to meet policy objectives. As compared to traditional investment treaties, the BIT imposes additional obligations on investors and appears to seek to address, to a degree, the criticism that such investment treaties have been too heavily geared towards protecting investor interests.
We explore below some of the more unusual aspects of the BIT, and consider the innovative nature of the BIT by comparison to other intra and extra-African treaties concluded in recent years.