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News / 8 April 2014

Parliamentary questions about Bilateral Investment Treaties

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In March the Indonesian government announced that it will terminate the Bilateral Investment Treaty (BIT) with the Netherlands as of July 1st, 2015 (for more information, see the press release of 24 March at the bottom of this post). Several organizations, including Both ENDS, have been raising questions about these controversial international trade agreements for a long time and think they should be drastically revised or even terminated. The Socialist Party and GreenLeft have asked parliamentary questions about the effects of these treaties following Indonesia’s decision. Both ENDS is curious about the answers to these parliamentary questions and about the consequences they will have for Dutch policy in this area.

The effects of BITs

BITs were originally intended to reinforce economic relations between two countries. But according to Burghard Ilge of Both ENDS this reinforcement often works in only one direction. "BITs grant investors excessive rights and no duties. They infringe upon the policy space of governments in the host countries, and threaten sustainable development, public interests and public services in those countries. For example, if a country wants to pass an environmental law that jeopardizes the profit margins of a foreign investor, that investor is entitled to sue the government of that country.

 

Private judges

Another disadvantage is that disputes between an investor and the host country are not settled in national courts, but in controversial international arbitration courts, such as the International Centre for Settlement of Investment Disputes (ICSID). Often, countries that want to introduce a different set of environmental and human rights rules are victims of these procedures. "In 2012, Europe accounted for 60% of all investment claims under BITs. These claims can rise to billions of dollars," says Ilge. The most recent example is the British company Churchill Mining,that is suing the Indonesian government for 2 billion U.S. dollars.

 

Comments from Indonesia

The decision to terminate the BIT is a first positive result for civil society organizations in Indonesia that have been opposing these unfair treaties for years now. "It also provides a basis to look carefully at other BITs," according to Riza Damanik, Director of the Indonesian NGO ‘Indonesia for Global Justice’. Bonnie Setiawan of the NGO 'RAP' from Jakarta agrees: "All BITs should be disbanded, as the sovereignty of nations is at stake, especially the right to an independent path to development. This is a step towards global justice!".

 

New standard

Indonesia follows in the footsteps of South Africa as the second country to cancel its BIT with the Netherlands. Both ENDS hopes that the Netherlands will take a critical look at these treaties and the negative effects they can have on countries.

 

24 March 2014: Joint Press release by Both ENDS, Centre for Research on Multinational Corporation (SOMO), Transnational Institute (TNI) and Indonesia for Global Justice (IGJ) about the termination of the BIT, on the website of TNI

 

31 October 2013: BIT-treaty between the Netherlands and South-Africa cancelled

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