(EU) and the Common Market of the South (MERCOSUR)? - FDCL
(EU) and the Common Market of the South (MERCOSUR)? - FDCL
(EU) and the Common Market of the South (MERCOSUR)? - FDCL
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
The <strong>MERCOSUR</strong> agreement, “Colonia Protocol on <strong>the</strong> Reciprocal Promotion<br />
<strong>and</strong> Protection <strong>of</strong> Investments within <strong>MERCOSUR</strong>”, should regulate <strong>the</strong> mutual investment<br />
conditions for foreign investors from <strong>MERCOSUR</strong> countries within <strong>the</strong> four<br />
<strong>MERCOSUR</strong> states. As a regional FTA <strong>the</strong> <strong>the</strong>rein contained regulations do not have<br />
any effect on non-<strong>MERCOSUR</strong> states. The MFN clause does not extend its validity<br />
to third parties, as with bilateral investment treaties.<br />
The “Buenos Aires Protocol on <strong>the</strong> Promotion <strong>and</strong> Protection <strong>of</strong> Investments<br />
Made by Countries That are not Parties to <strong>MERCOSUR</strong>” from August 5, 1995,<br />
however, has a special position within <strong>the</strong>se treaties: Being a regional agreement on<br />
investment, it treats <strong>the</strong> role <strong>of</strong> third parties <strong>and</strong> can <strong>the</strong>refore, after its ratification,<br />
have legal consequences for o<strong>the</strong>r Brazilian agreements or those <strong>of</strong> o<strong>the</strong>r MERCO-<br />
SUR states- by, e.g., causing a chain reaction in <strong>the</strong> tightly integrated net <strong>of</strong> existing<br />
investment agreements. Therefore, a study commissioned by <strong>the</strong> Brazilian National<br />
Congress recommended, that if bilateral investment treaties were to be ratified, <strong>the</strong>n<br />
this agreement should be ratified first, so that its provisions can have legal effects on<br />
all following agreements. 287<br />
All <strong>of</strong> <strong>the</strong>se agreements follow <strong>the</strong> scheme <strong>of</strong> modern bilateral investment<br />
agreements <strong>and</strong> contain dispute settlement mechanisms, also for investor-to-state<br />
disputes <strong>and</strong> <strong>the</strong> party taking legal action can freely choose <strong>the</strong> court <strong>of</strong> jurisdiction.<br />
One exception to this is <strong>the</strong> <strong>MERCOSUR</strong>-protocol, which also concedes <strong>the</strong> investor<br />
<strong>the</strong> right to choose, but <strong>the</strong> o<strong>the</strong>r parties (<strong>the</strong> affected state) can reject this. All agreements<br />
explicitly take <strong>the</strong> principles <strong>of</strong> MFN <strong>and</strong> NT as an orientation, <strong>and</strong> regulate <strong>the</strong><br />
unrestricted capital <strong>and</strong> pr<strong>of</strong>it transfer, which cannot be obstructed by any national<br />
regulations: In <strong>the</strong> case <strong>of</strong> severe difficulties with its balance <strong>of</strong> payments <strong>the</strong> Brazilian<br />
government would be prohibited from taking any action to steer or influence <strong>the</strong><br />
crisis, due to <strong>the</strong> international treaty.<br />
The agreement with Switzerl<strong>and</strong>, which is signed, but not yet ratified, goes fur<strong>the</strong>r<br />
than o<strong>the</strong>r agreements: It is <strong>the</strong> only agreement which explicitly states that compensation<br />
payments have to be made in freely convertible currency. According to a<br />
study commissioned by <strong>the</strong> Brazilian Congress this could be in contradiction to <strong>the</strong><br />
287 Déborah Bithiah de Azevedo: Os acordos para a promoção e a proteção recíproca de investimentos assinados<br />
pelo Brasil, Consultoria Legislativa, Câmara dos Deputados, May 2001, p. 5.<br />
99