Daily News Analysis 8 April 2023
Table of Contents

GS-2

• Some advice to India on the IFA negotiations

Facts for Prelims

• Deep-sea mining
• Pseudomonas aeruginosa
• UN Statistical Commission

Some advice to India on the IFA negotiations

Context

Although the World Trade Organization (WTO) is not doing well, there is a lot of work being done to create an agreement called the Investment Facilitation Agreement (IFA). Over 100 countries, not including India, support the IFA, which will create rules to make it easier for investments to happen. These rules will be legally binding.

Key Highlights

• The investment facilitation agreement (IFA) will require countries to improve the transparency and predictability of their investment regulations.
  • This agreement is not like the bilateral investment treaties (BITs), which allow foreign investors to sue the host country for treaty violations through investor-state dispute settlement (ISDS).

Fear of ISDS

Claims under existing BITs

• India is not participating in IFA negotiations due to concerns that foreign investors may use it to bring claims under existing BITs.
• Foreign investors may use the MFN provision in BITs to import provisions from the IFA that are more favorable to them.
• The FET provision in BITs may also be used to challenge non-compliance with IFA, as it includes investors’ legitimate expectations.
• The umbrella clause in BITs may allow foreign investors to bring contractual commitments under the treaty’s protective umbrella.
• However, the possibility of foreign investors successfully importing IFA provisions into the BIT is unlikely, as many BITs exempt economic integration agreements from the application of MFN.

ISDS Tribunal Unlikely to Accept Claims Based on IFA Provisions

• An ISDS tribunal is unlikely to accept a foreign investor\’s claim that non-compliance with IFA breaches their legitimate expectations.
• The only exception would be if a state made specific assurances to the foreign investor about IFA commitments as part of luring them to invest and then broke those assurances without a proportionate public policy justification.
• A binding IFA alone cannot form the basis of an investor\’s legitimate expectations.
• The argument that foreign investors can use the MFN provision in BITs to import more advantageous IFA provisions is doubtful.
• Many BITs exempt economic integration agreements from the application of MFN, making it remote for foreign investors to import IFA provisions into the BIT.
• \”Umbrella clause\” that allows commitments owed to a foreign investor to be brought under a BIT\’s protective umbrella is another entry point for IFA provisions into the ISDS mechanism, but it is uncertain whether it would be successful in a tribunal.

IFA obligations as a breach of a BIT’s ‘umbrella clause’

• Most new investment treaties avoid ‘umbrella clauses’ altogether, limiting the possibility of investors suing states for non-compliance of IFA obligations as a breach of a BIT’s ‘umbrella clause’.

IFA can be firewalled from BITs

• The IFA can be firewalled from BITs by stating that it cannot be used to interpret or apply any rule for the protection of investment contained in any investment treaty.
• The IFA can also categorically state that it does not create rights for non-signatory countries and their investors.
• The draft IFA text includes such language aimed at insulating the IFA from BITs and ISDS.

Reforming BITs

• Critics argue that the IFA alone cannot prevent ISDS claims brought by investors under BITs.
• For an ISDS tribunal, the IFA is just another international law instrument that must be interpreted and applied in accordance with the relevant BIT.
• Countries can exclude the IFA from the scope of their BITs by amending them.
• The BIT reform process is already underway, with older treaties being replaced with newer ones that contain more balanced provisions.
• Given the sizeable number of countries pushing for the IFA, they can agree to reform their BITs to exclude the IFA from its scope.

Conclusion

The possibility of an audacious ISDS tribunal interpreting provisions broadly can never be ruled out. But this cannot be a basis to oppose international law making, in the same way that a hypothetical likelihood of a national court interpreting the law wrongly cannot be the reason to cease domestic law making. Thus, India should not be opposed to joining the IFA negotiations at the WTO due to fear of ISDS claims.

Deep-sea mining

Context

International Seabed Authority has decided that it will start taking permit applications in July from companies that want to mine the ocean’s floor.

Key Highlights

• The undersea mining will be conducted to extract key battery materials cobalt, copper, nickel, and manganese from potato-sized rocks called “polymetallic nodules” found at depths of 4 kilometers to 6 kilometers (about 2.5 miles to 3.7 miles).
• Several countries including Canada, Australia and Belgium have insisted that mining cannot begin without strict rules.

 

What are Polymetallic nodules ?

• Polymetallic nodules are round structures made of manganese and iron hydroxides.
• They are found on the seafloor, particularly on the abyssal plains, at depths of 4000-6500 metres.
• The nodules form by layers of iron and manganese hydroxides accumulating around a central particle, such as a shell or small rock fragment.
• The size of nodules ranges from a few millimeters to tens of centimeters.
• The growth rate of nodules is extremely slow, at a rate of millimeters per million years.
• Nodules contain commercially attractive concentrations of metals such as nickel, copper, and cobalt, as well as traces of other valuable metals like molybdenum, zirconium, and REEs.
• The composition of nodules varies based on the environment they were formed in.

 

United Nations Convention on the Law of the Sea (UNCLOS)

• UNCLOS, also known as the Law of the Sea Convention or Treaty, defines the freedoms and responsibilities of countries in using the world\’s seas.
• The convention sets out a comprehensive framework for peace and legality in the world\’s oceans and seas, with rules governing all aspects of their use and resources.
• UNCLOS recognizes that all matters relating to ocean space are closely interconnected and should be addressed as a whole.
• The convention has led to the creation of three new international institutions: the International Tribunal for the Law of the Sea, the International Seabed Authority, and the Commission on the Limits of the Continental Shelf.
• The International Tribunal for the Law of the Sea is a judicial body that resolves disputes relating to the interpretation and application of UNCLOS.
• The International Seabed Authority is responsible for regulating deep-sea mining and exploration activities in international waters.
• The Commission on the Limits of the Continental Shelf is responsible for providing scientific and technical advice on the extent of the continental shelf beyond 200 nautical miles from a state\’s coastline.

International Sea Bed Authority

• The ISA was established in 1982 as an autonomous intergovernmental body with 167 members.
• It is responsible for designing and controlling all mineral-related resource activities in the area through UNCLOS.
• ISA became operational in June 1996 and has 168 members, including the European Union.
• The main activity of ISA is to regulate the exploration of poly-metallic nodules.
• ISA assesses environmental impact assessments and supervises mining activities in the ‘Area’.
• India is an active member of the ISA and was re-elected in 2020.

                                           Pseudomonas aeruginosa

Context

Recently, the US Centers for Disease Control flagged Indian eye drop for death, and blindness caused by Pseudomonas aeruginosa.

Pseudomonas aeruginosa

• Pseudomonas aeruginosa is a type of aerobic microorganism.
• It is a motile, Gram-negative rod-shaped bacteria that can be found in various habitats worldwide.
• Pseudomonas aeruginosa has industrial applications and is cultivated for the production of primary and secondary metabolites.
• It is also used as a biosurfactant for environmental cleanup, restoration, and remediation.

Disease caused by P. aeruginosa:

 

Pneumonia: Pneumonia caused by P. aeruginosa is a type of lung infection that can occur when people are in the hospital. It can happen if medical equipment like bronchoscopes are not cleaned properly and are contaminated. Symptoms include fever, chills, and difficulty breathing.

 

Sepsis/Bacteremia: Sepsis is a serious condition that can happen if P. aeruginosa gets into the bloodstream. This can cause irregular heart rate, low blood pressure, and organ failure.

 

Urinary tract infection: P. aeruginosa can also cause urinary tract infections in people using medical devices or undergoing dialysis. The bacteria can enter the body through the skin and cause painful symptoms in the urinary tract.

UN Statistical Commission

Context

Recently, India has been elected to the UN Statistical Commission for a four-year term.

UN Statistical Commission

• The UN Statistical Commission is an organization established in 1947.
• Its headquarters is located in New York, USA.
• The organization comprises Chief Statisticians from member states around the world.
• The UN Statistical Commission is responsible for setting statistical standards, developing concepts and methods, and overseeing the work of the UN Statistics Division.
• The organization holds annual sessions to discuss international statistical activities, with the 54th session being held in February-March 2023.

Mandate

• The commission was established by the Economic and Social Council.
• Its main role is to assist the Council in promoting the development of national statistics and improving their comparability.
• The commission is also responsible for coordinating the statistical work of specialized agencies.
• It helps in the development of the central statistical services of the UN Secretariat.
• The mandate of the commission is to promote the use of official statistics for evidence-based decision-making and policy formulation.

Membership:

• The Commission consists of 24 member countries of the United Nations.
• The members are elected by the United Nations Economic and Social Council.
• The basis of election is equitable geographical distribution.
• African States have five members, Asia-Pacific States have four, Eastern European States have four, Latin American and Caribbean States have four, and Western European and other States have seven.
• The term of office for members is four years.
• India is one of the member countries.

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