USING BILATERAL INVESTMENT TREATIES TO BATTLE A BACKLASH AGAINST NON-PROFITS

According to the International Center for Not-for-Profit Law, civil society organizations are experiencing a growing backlash from governmental authorities in many parts of the world, especially in the Middle East, the former Soviet Union, Asia and Africa.  The range of obstacles they have encountered include the outright seizure of assets and facilities, dissolution, de-licensing, restrictions or bans on the use of foreign funding and intimidation.    

While affected organizations may have recourse to remedies under local law or international human rights agreements, such remedies can be of limited utility. For example, local courts are sometimes reluctant to rule against the state and not all human rights treaties are enforceable. At times, not-for-profit organizations appear to conclude purpose-built investment contracts or host government agreements to protect their overseas activities.

A less-explored avenue for not-for-profit organizations has been proposed, namely, the existing international regime governing economic activities, consisting of the vast and still-growing network of international treaties for the protection of foreign investments, commonly referred to as bilateral investment treaties (“BITs”).    

Though not conceived primarily as instruments for protecting not-for-profit actors, many investment treaties potentially afford significant protection to not-for-profit actors’ investments. Not-for-profit organizations may be able to rely on such treaties to bring a claim for direct expropriation where a state seizes assets. Organizations may also be able to claim for breaches of treaty obligations requiring the free transfer of capital, fair and equitable treatment, full protection and security and national treatment where states interfere with the transfer of funds, discriminate between organizations, deny re-registration on arbitrary grounds or contrary to prior representations, or intimidate, or fail to prevent non-state actors from intimidating, not-for-profit organizations.

Note, the possibility of asserting a claim under a BIT is a welcome avenue of possible redress.  It is, however, far from perfect.  A claim under a BIT must be brought before an arbitral tribunal and there are some inescapable uncertainties as to the scope of some BITs’ coverage.  Moreover, even if a claim is successful, a state may refuse to provide the remedies ordered by the tribunal.  It is not clear what recourse a non-profit would have in such circumstances.  The lack of clarity here, however, may  augur for non-profits somehow teaming up with an inter-governmental organization or sovereign aid agency when planning to carry out activities in a county hostile to non-profits.  This could give it the benefit of political and diplomatic pressure as backing against a recalcitrant governmental authority.

SS