Leadership | 4 June 2021
Nigerian govt asked not to ascent to Energy Charter Treaty
Labour unions and civil society organizations have expressed concerns over Nigeria’s ambitions to join the Energy Charter Treaty (ECT).
They therefore urged the government not to assent to the ECT, explaining that the Treaty contains provisions for an Investor-State Dispute System (ISDS), which accords investors obscene privileges and a “ridiculous sense of entitlement without real obligations.”
They argued that the ISDS, as a trade dispute resolution mechanism, has been criticized around the world for allowing investors to sue governments for millions of dollars at the expense of employees and citizens
They also expressed surprise that the Nigerian Energy Commission was leading the process to join the ECT, even though the government had begun a reform process in 2016 under the Federal Ministry of Industry, Trade, and Investment to eliminate or limit the exposure of Bilateral Investment Treaties (BITs) to ISDS.
“Enrolling in ISDS reforms while still signing onto the ECT is a zero-sum game for Nigeria,” Comrade Peters Adeyemi, the Vice President of Public Services International (PSI), told journalists in Abuja.
Adeyemi who is also the General Secretary of the Non-Academic Staff Union of Educational and Associated Institutions (NASU) further stated that any attemp to assent to the ECT “nullifies all of the years of work to improve ISDS.”
The Investor State Dispute System (ISDS) is a litigation mechanism in bilateral investment treaties (BITs) and other multilateral or bilateral trade agreements. It enables big corporations to sideline domestic courts and sue national governments when they believe policies and actions of a government jeopardizes the chances of making profits off their investments.
These government decisions and policies could be a rise in the minimum wage, policies to protect public health or the environment, re-municipalization of public services, tax reforms or efforts to keep the price of public services affordable.
Once investors feel these decisions could harm their current and future profits, they can sue the government in an international tribunal, often based in Washington at the World Bank.
The ISDS has become an origin of illicit financial flows (IFFs) and constrains governments’ space to reform national policies. In essence, ISDS is one of the mechanisms for eroding and constraining national policy spaces that government can use to protect its citizens.
Between 1993 and 2010, Africa’s loss due to ISDS cases was reported to be more than $50 million. In 2007, the Nigerian government was involved in a legal battle with Shell over an oil field known as OPL 245.
The Nigerian government agreed to a settlement in 2011 that favoured Shell and its Italian partner Eni in exchange for a 1.3-billion-dollar concession offer. One may ask, can’t the government also sue investors when their actions affect the economy and livelihood of people negatively? Under the ISDS, only investors have the rights to sue governments. It is a one-side advantage investment lever.
Given the undemocratic, one-sided, and resource-pillaging nature of the ISDS, national governments, labour unions, Civil Society Organizations (CSOs), trade experts have called on National governments through the United Nations Commission for International Trade Law (UNCITRAL), to limit the exposure of BITs to ISDS or exit BITs with ISDS provisions.
Nigeria is among the few African countries taking steps to reverse the negative effects of signing onto BITs with ISDS provisions.
Since 2016, under the chairmanship of the Federal Ministry of Industry, Trade and Investment, Nigeria has set out to develop a new model Bilateral Investment Treaty; modernize the existing stock of old-generation treaties; and, develop a coherent domestic legal framework that allows for easy settlement of trade disputes.
The deputy director of the legal department of the Nigeria Investment Promotion Commission (NIPC), Patience Okala, had said, “the reform process aims to establish a new model BIT which complies with global standards on labour, human rights, environment, and corporate social responsibilities and provides safeguards to Investor-State dispute settlement (ISDS) provisions”.
The results of the reform process has reflected in the NIGERIA- MOROCCO BIT, described as “a balanced “new generation” investment treaty”.