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Performance Requirement Prohibitions in International Investment Law

Alexandre Genest will defend his PhD dissertation ‘Performance Requirement Prohibitions in International Investment Law’ as part of a double PhD programme at the Universities of Leiden and Ottawa.

Alexandre Genest about his dissertation
Alexandre Genest

On Tuesday 17 October 2017 Alexandre Genest will defend his PhD dissertation ‘Performance Requirement Prohibitions in International Investment Law’ (Verboden op prestatie-eisen in internationale investeringsrecht) as part of a double PhD programme at the Universities of Leiden and Ottawa. The defence will commence at 11.15 hrs, in the Academy Building of Leiden University, Rapenburg 73. The Supervisors are Professors M.E. Koppenol-Laforce. F. Baetens (Universities of Leiden and Oslo) and P. Dumberry (University of Ottawa).

Performance requirements act as policy instruments for achieving broadly-defined economic and developmental objectives of States, especially industrial and technological development objectives. Many States consider that performance requirements distort trade and investment flows, negatively impact global and national welfare and disrupt investment decisions compared to business-as-usual scenarios. As a result, a number of States have committed to prohibiting performance requirements in international investment agreements (“IIAs.”). Performance requirement prohibitions (“PRPs”) are meant to eliminate trade-distorting performance requirements and performance requirements which replace investor decision-making by State decision-making. 

This thesis focuses on providing answers to two research questions: first, how do States prohibit performance requirements in IIAs? And second, how should PRPs in IIAs be interpreted and applied?

For the first time, this thesis: proposes a unitary understanding of PRPs in IIAs by drawing notably on the General Agreement on Tariffs and Trade (“GATT”) Uruguay Round of negotiations and on the United States Bilateral Investment Treaty (“BIT”) Programme; develops a detailed typology and analysis of PRPs in IIAs through the identification of systematically reproduced drafting patterns; conducts the first critical and in-depth analysis of all publicly available arbitral awards which have decided claims based on PRPs in IIAs; analyses interpretation and application issues related to provisions that exempt government procurement from PRPs and to reservations that shield sensitive non-conforming measures or strategically important sectors from PRPs; and anticipates the application of most-favoured nation (“MFN”) treatment clauses to PRPs in the future.

Finally, this thesis formulates proposals that can help interpret and apply existing PRPs and draft future PRPs in a more deliberate and informed way.

Professor Marielle Koppenol-Laforce, also on behalf of co-supervisors Professor Freya Baetens and Professor Patrick Dumberry

"Alexandre set out on the laborious task of finding the answers to two research questions in relation to performance requirements which appear in numerous trade agreements and investment treaties between States. As these performance requirements are generally seen as distorting trade and the free flow of goods, he tried to propose a solution to minimize these effects when some requirements still need to be applied. To achieve this he researched how States prohibit performance requirements (PRPs) in investment and trade agreements (IIAs). Secondly, he tried to come to a unified interpretation and application of PRPs in IIAs. He compared many PRPs and the decisions of many arbitral tribunals relating to these and he tried to draft a catalogue for uniform interpretation.

Not an easy task given the wealth of material, the diverse aims of the treaties on a micro level and, unfortunately, the logical compromise character of most of the texts and diverging decisions of arbitral tribunal and courts. Fortunately he has succeeded in providing law makers, judges and tribunals with a catalogue on how PRPs  should be drafted and interpreted to maximize their application. We applaud his perseverance in these far from easy reading materials, in quantity and quality. Moreover, if words used by negotiators and tribunals are studied under a microscope, it does not get easier to draw conclusions.

The end result is an impressive list of PRPs and their interpretation, and recommendations on how more uniformity can be reached. The economy will certainly profit highly from this voluminous work. We admire his meticulous research and the conclusions he was able to draw from so many diverging opinions. We hope that treaty negotiators will make the effort to study his work before including performance prohibitions in any new treaties and that dispute resolution professionals will also resort to it when confronted with PRPs."