CYIL vol. 10 (2019)

CYIL 10 ȍ2019Ȏ IN SEARCH OF THE PERFECT DENIAL OF BENEFITS CLAUSE from the last decade, I decided to analyse whether the outcomes had a positive impact on the drafting in the period of the last five years. 3.1 Evaluation of the model BITs and IIAs concluded in the last five years Notwithstanding the enormous negative impacts on states caused by treaty shopping, only about one quarter of the 206 IIAs signed from 2014 include some form of a denial of benefits clause. 36 Going beyond the numbers, I will now turn to the evaluation of those 47 IIAs with regards to their content. As examples for the analysis, I chose IIAs concluded in 2014 onwards and model BITs introduced by states in the same time period. The object of this section is to evaluate whether the states managed to reflect the problems of the “classical” denial of benefits clause and to introduce more functional models in the concluded IIAs. Most of the IIAs unfortunately contain the clause in its usual wording. Below I will focus on the IIAs whose contracting parties tried to solve some of their problematic aspects, indicate the way the drafting practice could evolve towards and identify the most dangerous gaps that still remain in a number of treaties. 3.1.1 The triggering of the clause As shown above, the clause is commonly drafted as to enable the state to trigger its application and thus an active intervention is needed. From the perspective of a state, a question arises whether the clause could not in principle operate in an automatic way, adding thus another condition for investors to qualify for protection, since this approach would ease the position of respondents. Indeed, this approach has been already employed in some BITs, namely in the 2016 Iran– Slovakia BIT 37 that reads that the benefits of the treaty “shall be denied” , and the Emirates– Mauritius BIT, 38 according to which the benefits of the agreement “shall not be available” . It this case, the clause will be applied automatically. If the contracting states perceive treaty shopping as a problem that they seek to tackle in the investment treaty, it is in the interests of the states to secure as easy application as possible. 3.1.2 Timeliness The part concerning the timeliness of the denial can be found in certain IIAs. Such a reference indicates a prudent approach of the contracting states that aimed to prevent future controversies about whether the denial was or was not invoked too late. The lack of such specification causes unnecessary uncertainty for both claimant and respondent that can be very easily prevented. For instance, the Canada–Hong Kong BIT simply states that: “ [a] party may, at any time including after the institution of arbitration proceedings […] , deny the benefits of this agreement to an investor of the other Party that is an enterprise of that Party and to investment of that investor, if […] ” 39

36 According to the selected search on https://investmentpolicyhub.unctad.org/. 37 See Iran–Slovakia BIT, Article 8. 38 Emirates–Mauritius BIT, Article 15. 39 Canada–Hong Kong BIT, Article 18, similarly, see Hongkong–Chile BIT Article 19 or India model BIT, Article 35.

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