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Daniel Behailu Gebreamanuel, for the standard Addis
Addis Ababa, July 06, 18 – "The cure for a sick democracy is more democracy," said Fareed Zakaria [1] Ethiopia, not only is our democracy in trouble, but many doubt the existence of the "nascent democracy" often flouted by the government until very recently. On the other hand, the country is trying to attract FDI with all the ensuing obligations in the international investment treaties; among others, the obligation of to stabilize the country. Among these fundamental obligations of the State assumed under the Treaties [2] are: the obligation to extend full protection and security (FPS) to foreign investors (and their investments) and to Extend fair and equitable treatment (FET). The scope of these obligations, as well as many other obligations, are considerable and should not be taken lightly. In addition, underestimating their reach is not an easy undertaking.
These obligations are understood internationally as creating strict liability without it being necessary to prove the fault of the host State assuming such obligations. It is in the realm of international investment law that host states must forge a stability that emanates from a well-administered government. [3] Instabilities of all kinds (political, legal and economic) and the resulting riots have caused massive damage to the world's IED due to the obligation to be diligent . Host State governments often assume their own responsibilities and pay compensation, but the question is why? How is such a state responsible? What is the nature of these obligations?
In Ethiopia, a very startling news was printed this week by the Amharic reporter newspaper [5] claiming that Ethiopia had paid more than half a billion Birr to compensate or fully damaged in the riots that took place in the last three years. [6] It has also been confirmed that more than 300 companies have been affected by the riots and only 200 of them are compensated. In addition, most of the damaged investments are in areas of agriculture and coffee washing; suggesting that FDI in declared nature is in conflict with people's perception or reality. [7]
In addition, there is a recent crisis in FDI in Ethiopia. MEDROC business agglomerate has also been in the list of this crisis, one of its companies, MEDROC legedenbi gold mine ceased operations after a serious health crisis in the neighboring community and subsequent protests against the society, which led the relevant government bodies to [8]
Again, in the town of Bishoftu, a Chinese business belonging to the butcher shop [9] has raised popular anger and uprising, forcing the city administration to shut down the business. Once again, among the most recent crisis, there was the murder of the director of Dangote Cement Factory, the largest cement plant in the country. These two subsequent incidents could be a good cause for action for "indirect expropriation" [10] which could involve a lot of responsibility on the moron of the state.
On the agenda of the people is also the flower plants that pollute the groundwater and using pollutants to grow flowers. Some social media campaigns indicate that the next target should be those tannery plants that seriously pollute the rivers (and emit very bad smells) that are used in waterways by people and livestock.
is engaged in many bilateral investment treaties that generously offer protections of one kind or another to these companies; sometimes it even goes against the norms of domestic law. So, what are the warnings of his responsibility? It seems that the government has acknowledged its responsibility and, behind the closed door, it is negotiating with some investors, probably paying a colossal amount of compensation. This fact negates the very idea of attracting FDI;
These protections that Ethiopia extends to investors have profound consequences that it is absolutely essential to digest their importance. Once we understand the scope of this protection, it is also very important that the state meets its obligations and that it also assumes the obligations that it can reasonably fulfill.
What are the guarantees of protection of investments?
The world takes a look at the importance and importance of international investment, and its size and importance are steadily increasing. [11] Many countries did not reach agreements on substantive investment regulation issues, but settled procedural issues through the International Convention on the Settlement of Investment Disputes (ICSID) [12]. States, mainly on a bilateral basis or regional blocks.
Ethiopia has already signed more than 33 bilateral investment treaties (BITs). The question is: what does the reading of all these treatises tell us? This is not good news. Often, these treaties are poorly negotiated and impose all kinds of obligations. Ethiopia lacks BITs types that prudent nations take as a general framework with which to negotiate. Moreover, impulsive agreements (not knowledge) could cost the country a lot. The political force is quite decided that the line of experts in the negotiation of these treaties, which impose all kinds of legal obligations. The effect is visible as a result of recent protests across the country.
In addition, there are many obligations that could have considerable consequences if the dispute intensified in global forums and intensified in a few areas. One of the protectors that investors are negotiating is the right to submit disputes to international arbitration bodies, which often take things very seriously and if the state is held accountable, the l? Compensation is on a global scale, ie the market value of the investment damaged or altered.
Thus, if one digests the nature of these obligations (host state obligations) in the BITs that Ethiopia has with investors, the scope and nature of these bonds could to be quite intimidating. The most common obligation is the commitment of Ethiopia to grant full protection and security to investors and their investments. In addition, a related and more elusive obligation is the obligation to treat investors and their investment in a fair and equitable manner (FET bond).
The question now is how are protection and security and fair and equitable treatment understood in global scenarios? What does it mean to extend comprehensive protection and security to an investment? What is an investment to start? Does it mean to have effective police and securities or is it more than a physical protection? These questions and other related issues could be raised to understand the nature of these obligations
AAPL vs. SriLanka in one case, due to a war between the state security forces and Tamil insurgents, investment (shrimp farming). ) was destroyed. In addition, 20 employees were killed. However, no evidence has been found as to who caused the damage. Yet, the arbitral award declared SriLanka violated its promises of comprehensive protection and security for not taking all necessary measures to stop the murder and destruction of investment.
Tribunal: Reasonable Preventive Measures A well-administered government could be expected to perform its duties in similar circumstances . The Srilanka government has been held responsible for the damage caused to the investments. The government's fault has not been established; but the arbitral tribunal held that this would not have occurred in a well-administered government ". Thus, the state had the obligation to avoid insurgency, which means that a well-run government can not have insurgency and that it could have created one.
In a related case, Biwater v. Tanzania (2008): "… when the terms" protection "and" security "are qualified as" complete ", the content of the standard may extend to other matters than security This implies the guarantee of a state of stability in a safe environment, both physical, commercial and legal. " Thus, creating a stable economic and legal environment was the obligation At the same time, fair treatment is generally associated with "denial of justice and the avoidance of arbitrariness and the absence of discrimination." In a country like Ethiopia, the heaviness of the government could lead to responsibilities of one kind or another.For example, an arbitrary power outage and an interruption of the Internet could be a good reason for international appeal against Ethiopia
Thus, understanding at my level dial could easily be construed as an obligation of Ethiopia under the BITs. There is no doubt that Ethiopia must not escape strict compliance with this obligation unless it quickly cleans its house and renegotiates some of these strict transactions.
The Obligation to Democratize
The state has a fundamental obligation under the International Investment Agreement ( AII) to stabilize the business and legal environment with a view to making the nation conducive to the investment and content of investment firms. If a country decides to attract and keep FDI, then it is essential to forge its stability.
There are two ways to achieve this. I call them the Chinese model and the Western model. China's model is to maintain political restraint and open the economic front and reform laws strictly to guide the smooth functioning of the economy. The economy is not only liberalized and facilitated for FDI, but the goods and contracts are strictly secured thanks to a legal system that works well. On the other hand, the Western model is more focused on political stability and the free market, forged under the umbrella of liberal democracy.
Now, where is Ethiopia in these two models? He is more on the Chinese model but fails in many ways. Ethiopia's legal system is chaotic, the laws change like seasons and the parliament is the least equipped to make a well thought out law that goes through the events. Again, the front of the economy and the rhetoric of growth are more government data massed for political purposes.
However, since Prime Minister Abiy Ahmed came to power, the government has begun to reverse the trend. The Prime Minister is taking drastic measures and trying to improve the investment climate. But at the same time, the nature of the state's obligation must be analyzed and reforms must follow this path to avoid liability. Bad business must be renegotiated; to do this, the law must be re-evaluated both at the national and international levels.
The Next Steps:
First in the order of things is to open the political space such as & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; & nbsp; It is being developed and forging a forum for sustained political dialogue to enable a functioning democracy that provides global stability. A stable and predictable legal and economic system is key to attracting FDI. Yet, to forge a stable economic and legal system, political stability is a sine qua non in the case of Ethiopia.
Secondly, if stability is to work and pay dividends, true legal reform is required. bringing together knowledgeable officials (not interest groups) to guide the justice and investment sectors. At the same time, the Ethiopian Investment Commission, which seems to have a competent directorate, needs new competent and far-sighted officials from all professions. The commercial law reform, which started last week, must also aim to avoid minimum capital requirements, reduce corporate taxes and especially regulate (or privatize) government monopolies and affiliates of political parties. to avoid unfair competition. problems of market distortion.
The third is about inclusive governance. The question of land policy is quite critical. Land must be amenable to market force, at least in areas of high value (high value) land, and community tenure must be secure. Investment must be done with and in consultation with a given community, particularly with regard to land ownership issues.
The key to all this is the rule of law and a functioning democracy. The strategy is reform. The direction taken by the new Prime Minister is commendable but must be supported and guided by expert advice on all fronts. AS
Ed Note: Daniel Behailu Gebremanuel (Dr. iur.) Is an assistant professor at Hawassa University, Ethiopia. He obtained his LL.B at the Addis Ababa University, his Master's degree in Comparative Law at the University of Delhi in India in 2006 and his PhD in Law at the University of Giessen in Germany in 2014. He has lectured in the field of land law and governance. Investment Law, Rights and Ownership of Indigenous Societies, International Environmental Law, Law and Governance, Human Rights and International Law. It can be reached at
Endnote:
[3] 1 Oct. 1991 – AAPL v ]. Sri Lanka (ICSID / ARB / 87/3:
[4] AMT v. Zaire (1997): "Zaire has taken no steps to protect the property of the applicant during The riots in Kinshasa revealed that it was of little or no importance that the incriminated acts be committed by a member of the Zairean armed forces or by a common burglar, because Zaire had a "duty of vigilance"
[5] Published on March 28, 2018, Amharic bi-weekly journalist
[6] Protests have been raging for the past three years until the appointment, in April 2018, of A new Prime Minister, Dr. Abiy Ahmed, who Rapid Reform of the Nation and Politics
[7] Published March 28, 2018, Amharic bi-weekly journalist
[8] After mining.com The inhabitants accuse the mine of polluting the l & # 39; water from their source and air, causing in humans and animals respiratory problems diseases, miscarriages, congenital malformations and disabilities. The MIDROC Gold Mine Pvt Ltd. (MGOLD), a member of the Ethiopian technology group MIDROC, is engaged in mining and exploration activities in Ethiopia. MIDROC Gold Mine PLC owns and operates the Legadembi Gold Mine, located 500 km south of Addis Ababa, Ethiopia. MIDROC Gold is actively involved in exploration projects located near the mine (Adola-Legadembi Exploration Permit – ALEL) and in another area some 600 km north-west of Addis Ababa ( Metekel exploration license – MEL). The Legadembi gold mine is an open pit mine with an annual production of 1.6 million tons of ore. The annual average production is about 4500 kg of gold – silver gilded (the production of fine gold is of the order of 3500 kg)
[9] Published on 17 April 2017 [Vol 17, No 885] Addis Fortune Newspaper, & Bishoftu The city administration closed the first donkey slaughterhouse, Shandong Dong. Located 48 km from Addis Ababa, the slaughterhouse can slaughter up to 200 donkeys a day. The company plans to bring the case to an international court, according to sources close to the case. "
[10] Expropriation resulting from a measure or a serious measure taken by the given whose effect is equivalent to expropriation property which involves a transfer of ownership. investor investment to the nation. (direct expropriation)
[12] The ICSID Convention ( International Convention for the Settlement of Investment Disputes ) is a treaty ratified by 153 Contracting States. It entered into force on 14 October 1966, 30 days after ratification by the first 20 States. Article 6 of the ICSID Convention requires that the ICSID Administrative Council adopt rules of procedure for arbitration and conciliation as well as for the administrative and financial regulations of the Center.
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