Argentina Reveals Plans to Review and Replace All BITs

By Diego Luis Alonso Massa, 17 May 2021

In a tweet posted mid-January 2021, Argentina’s Minister of Foreign Affairs, Mr. Felipe Solá effectively revealed plans to review all of Argentina’s Bilateral Trade Agreements (BITs) – not only those signed 25 years ago.

The tweet purports to limit the review to 49 BITs. However, this number is significant: once BITs terminated or not yet in force are accounted for, only 49 of the 61 BITs Argentina has signed since the early 1990s remain.

These BITs have proven to be contrary to Argentina’s national interest, as they paved the way for awards of “dubious fairness” explained Argentina’s Minister of Foreign Affairs. However, the plans to review Argentina’s BITs are not new.

Local news reports that discussions have been ongoing for some time within the Peronist coalition – with former Argentine President, now Vice-President, Cristina Fernández de Kirchner as the driving force. Mrs. Kirchner has been an overt critic of Argentina’s BITs – especially those signed during the 1990s. In 2012, while President, she reportedly said in a public meeting that:

“During the 1990s - to ensure investment and send out a good signal - we signed BITs, which are actually almost plundering, anti-Argentine, clearly against Argentina's policy, and which also include clauses, renewal clauses, and if one denounces them, they have 15 or 20 more years of additional effectiveness, what is known as ultra-activity.”

Since the Minister of Foreign Affairs’ mid-January 2021 tweet, no further progress has been reported in the local news. Nor has any further information been provided through official channels or by the protagonists themselves. As these are still early days, this is unsurprising.

So far, only the Argentina - Chile BIT signed in 1991 has been terminated and replaced by a more comprehensive Free Trade Agreement (FTA).

It is widely understood that Argentine authorities intend using Chapter 8 (Investments) of this FTA as a model for future BIT reforms. And the left-wing Peronist coalition seems to have no objections to that, despite it being signed during the center-right administration of former President Mauricio Macri.

Chapter 8 (an unofficial English translation can be requested at: alonso@arbitrage-transnational.com) introduced several new features dealing with investment dispute settlement, including, notably:

  • It reaffirms states’ “right to regulate” (Art. 8.4), permitting them to issue regulations to further public policy objectives in areas of public health, the environment, social and consumer protection.
  • It establishes concrete criteria for determining whether measures can be deemed an indirect expropriation (Art. 8.8. (2)). For example, when determining whether an indirect expropriation has occurred, a factual and case-by-case investigation is now required to establish whether the measures taken by a State have interfered with the investment, and whether such measure/s had an economic impact on the investment in question. The fact that the measures taken by the State have an economic impact on the investment will not, by itself, constitute an indirect expropriation.
  • It requires an arbitral tribunal established under Chapter 8 to decide disputes submitted to it in accordance with the applicable rules of international law and, where applicable, the respondent's legal system. In addition, claims related to investments that are established or conducted as a result of acts of corruption will not be arbitrable (Art. 8.36).

What is striking – given this issue’s potential to significantly affect the Argentine economy – is how little attention it has received from journalists, politicians or public officials in the national government.

Any developments over the coming months and years will have to be carefully tracked as the renegotiation of 49 individual BITs is unlikely to be completed before current president Alberto Fernández's (Peronist coalition) term ends.

Between 1990 to 2018, Argentina signed 61 BITs. Of them, 54 were signed between 1990 and 1999, two between 2000 and 2001 and three between 2016 and 2018.

BITs signed with Japan (2018), United Arab Emirate (2018), Qatar (2016), Dominican Republic (2001), Greece (1999), and New Zealand (1999) are not in force.

BITs signed with India (1999), South Africa (1998), Indonesia (1995), Bolivia (1994), Ecuador (1994), and Chile (1991) have been terminated. 

URL: https://taobserver.com/news/4/argentina-reveals-plans-to-review-and-replace-all-bits