Investment Treaty Arbitration

Investment Treaty Arbitration: Mozambique

Overview of investment treaty programme

1. What are the key features of the investment treaties to which this country is a party?

Mozambique

BIT Contracting Party or MIT

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Algeria (25/07/2000)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Belgium – Luxembourg Economic Union (01/09/2009)

Yes

Yes

Yes

Yes

Yes

6 months

No2

Yes

Brazil (not in force)

No

Yes

No

Yes

No

No 3

No 4

No 5

China (26/02/2002)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

Denmark (30/12/2002)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Egypt (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Finland (21/09/2005)

Yes

Yes

Yes

Yes

Yes

3 months

Yes

Yes

France (06/07/2006)

Yes

Yes

Yes

Yes

No

6 months

No

Yes

Germany (15/09/2007)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

India (23/09/2009)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Indonesia (25/07/2000)

Yes

Yes

Yes

Yes

Yes

6 months

Yes6

Yes

Italy (17/11/2003)

 

Yes

No

Yes

Yes

6 months

Yes

Yes

Japan (29/08/2014)

Yes

Yes

No

Yes

Yes

3 months

No

Yes

Mauritius (26/05/2004)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes7

Netherlands (01/09/2004)

Yes

Yes

Yes

Yes

Yes

No

No

Yes

Portugal (31/10/1998)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

South Africa (28/07/1998)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Spain (not in force)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Sweden (01/11/2007)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Switzerland (17/02/2004)

Yes

Yes

Yes

Yes

Yes

6 months

Yes

Yes

United Kingdom (12/05/2004)

Yes

Yes

Yes

Yes

Yes

3 months

Yes

Yes

United States of America (03/03/2005)

Yes

Yes

Yes

Yes

No

90 days

Yes

Yes

Vietnam (29/05/2007)

Yes

Yes

Yes

Yes

Yes

6 months

No

Yes

Zimbabwe (not in force)

Yes

Yes

No

Yes

No

No

Yes

Yes 8

 

MIT Contracting Party

Substantive protections

Procedural rights

Fair and equitable treatment (FET)

Expropriation

Protection
and security

Most-favoured-nation (MFN)

Umbrella clause

Cooling-off period

Local courts

Arbitration

Organisation of Investment (OIC) Agreement (23/09/1986)

No

Yes

Yes

Yes

No

Yes 9

Yes

Yes

Southern African Development Community (SADC) Protocol (16/04/2010)

Yes

Yes

No

Yes

No

6 months

Yes

Yes

Qualifying criteria - any unique or distinguishing features?

2. What are the distinguishing features of the definition of “investor” in this country’s investment treaties?

Mozambique

Issue

Distinguishing features in relation to the definition of ‘investor’

Seat of the investor/place of business

While most Mozambican BITs provide that a legal person incorporated or organized under the laws of a Contracting Party is considered an “investor”, the Germany, France and China BITs additionally require that such companies have their seat or domicile within the territory of a Contracting Party, and the Finland BIT also requires that the central place of management is located within the territory of a Contracting Party.

Control by a national/non-national

Six investment treaties (Netherlands, Sweden, France, Vietnam, Belgium-Luxembourg and Brazil) expressly recognize as an ‘investor’ companies not incorporated under the laws of a Contracting Party for as long as they are controlled by a natural person national of a Contracting Party or by a legal person incorporated or organized under the laws of a Contracting Party.

In other investment treaties (USA, Zimbabwe and Japan), both parties reserve the right not to apply the BIT to investments made by companies controlled by investors of a non-Contracting Party.

Nationals

All Mozambican BITs include in the definition of ‘investor’ the natural persons nationals of a Contracting Party according to the laws of such Party.

Other

The SADC’s MIT defines as an investor any a natural or legal person that has been admitted to make or has made an investment. The Brazil BIT expressly refers to investment authorisation under domestic rules.

3. What are the distinguishing features of the definition of "investment" in this country’s investment treaties?

Mozambique

Issue

Distinguishing features in relation to the concept of ‘investment’

Eligible assets

Most investment treaties contain a clause whereby ‘investment’ includes every kind of asset owned or controlled by a national of a Contracting Party. The Brazil BIT also requires that such assets are owned or controlled for the purpose of establishing lasting economic relations and for the production of goods and services. The OIC’s BIT only considers investments in “one of the permissible fields in the territories of a Contracting Party”.

The SADC’s MIT defines investment as the purchase, acquisition or establishment of productive and portfolio investment assets and lists some non exhaustive examples.

Indirect control of assets

Seven investment treaties (Sweden, USA, Vietnam, Finland, Japan, Belgium-Luxembourg and Brazil) expressly include in the definition of ‘investment’ assets indirectly controlled by a national of a Contracting Party.

Exclusion of certain assets

The Vietnam BIT excludes certain kinds of assets from the definition of ‘investment’, such as assets solely resulting from a purchase and sale agreement.

Commencement of treaty protection

Most BITs provide for the protection of investments made prior to the entry into force of the treaty. However, some treaties limit such application to prior investment made in accordance with the relevant legislation of the Contracting Party in force when the investment was made.

Moreover, the protection granted by the Italy BIT is limited to investments made after 18 August 1984 and the application of the Zimbabwe BIT is limited to investments made after 18 September 1984.

In other cases, although the BIT is applicable to all investments, even if made before its entering into force, it expressly clarifies that will not apply to disputes already pending or and to disputes previously decided (Netherlands, Denmark, Sweden, Vietnam, Switzerland, Finland, Indonesia, India, Belgium-Luxembourg, Spain, Egypt and Germany BITs).

Admission/approval of investments

Some BITs expressly require investments to have been approved by the Government of the Contracting Party in whose territory the investment is made (eg USA, Mauritius and Indonesia).

Substantive protections - any unique or distinguishing features?

4. What are the distinguishing features of the fair and equitable treatment standard in this country’s investment treaties?

Mozambique

Issue

Distinguishing features of the fair and equitable treatment standard

FET Standard

Most BITs include non-impairment clauses in the obligation of fair and equitable treatment.

Customary international law

In some investment treaties (USA, France, Japan and Spain), customary international law is the minimum standard for fair and equitable treatment.

5. What are the distinguishing features of the protection against expropriation standard in this country’s investment treaties?

Mozambique

Issue

Distinguishing features of the ‘expropriation’ standard

Rights to regulate for a public purpose

All investment treaties allow the Contracting Parties to expropriate assets for public purposes, also providing for a right to compensation.

Indirect expropriation

With the exception of the Netherlands and the Brazil BITs and the SADC’s MIT, all BITs provide for protection against measures with equivalent effect to expropriation or nationalisation.

Prompt review by a competent authority

Most BITs expressly provide that the investor shall have a right to prompt review of his case by local remedies (eg Germany, India, Portugal, UK, Italy, Mauritius).

Expropriation in accordance with ‘due process of law’

The majority of the treaties concluded by Mozambique require that expropriation of an investment must occur under ‘due process of law’.

Taxation and expropriation

The USA investment treaty expressly provides for a right to arbitration in case the investor considers a tax measure as having an effect tantamount to expropriation or nationalisation, provided that the investor has previously referred to the competent tax authorities of both Parties the issue of whether that tax measure involves an expropriation or nationalisation. However, the investor cannot submit the dispute to arbitration if, within nine months after the date of the referral, the competent tax authorities of both Parties determine that the tax measure does not involve an expropriation or a nationalisation.

Non-discrimination

Most investment treaties require that expropriation measures are put into effect in a non-discriminatory basis.

Compensation and interests

Except for the Mauritius, Indonesia and Zimbabwe BITs, and OIC’s and SADC’s MITs, compensation for a measure of expropriation must include interests at a commercially reasonable rate.

6. What are the distinguishing features of the national treatment/most-favoured-nation treatment standard in this country’s investment treaties?

Mozambique

Issue

Distinguishing features of the ‘national treatment’ and/or ‘most favoured nation’ standard

Common exceptions

Most Mozambican BITs provide that the provision of ‘most favoured nation’ and/or ‘national’ treatment does not include the benefits of membership of a customs union, economic and monetary union or free trade area, taxation agreements and multilateral agreements. This is not the case of the UK, Japan and Zimbabwe BITs.

Scope of MFN treatment

Whilst some investment treaties only mention that MFN treatment applies to ‘investments’, others also expressly include a reference to ‘returns’.

Limitations on national treatment

The Vietnam BIT explicitly determines that ‘the Contracting Party may maintain any measure or special incentives granted only to its investors in the context of its development policies’.

The Protocol to the France BIT also includes a limitation to ‘national’ treatment regarding special incentives granted to Mozambican nationals with a view to the development of small and medium national companies.

Moreover, the Protocol to the Germany BIT also establishes that (i) measures adopted for security, public order, public health reasons; (ii) fiscal benefits applicable to nationals or companies from a Contracting Party; (iii) or measures specifically adopted in order to promote the development of small and medium Mozambican enterprises will not be construed as implying a less favourable treatment.

Pursuant to the SADC’s MIT, Contracting Parties may in accordance with their respective domestic legislation grant preferential treatment to qualifying investments and investors in order to achieve

national development objectives.

Non-conforming measures

The Japan BIT provides that ‘most favoured nation’ and ‘national’ treatment provisions do not apply to certain existing non-conforming measures.

Fiscal benefits

The Netherlands BIT expands the ‘most favoured nation’ and ‘national’ treatment to fiscal benefits, excluding any special fiscal advantages falling into the common exceptions.

7. What are the distinguishing features of the obligation to provide protection and security to qualifying investments in this country’s investment treaties?

Mozambique

Issue

Distinguishing features of the ‘protection and security’ standard

Scope

In general terms, Mozambican investment treaties provide for ‘full protection and security’. The OIC’s MIT provides only for “adequate protection and security”.

Customary international law

USA, Finland, Japan and Belgium-Luxembourg BITs expressly refer to customary international law standards of protection and security.

8. What are the distinguishing features of the umbrella clauses contained within this country’s investment treaties?

Mozambique

Issue

Distinguishing features of any ‘umbrella clause’

Scope

Apart from the Italy BIT which expressly includes a duty of good faith in this regard, most of the umbrella clauses included in Mozambican BITs have no distinguishing features.

9. What are the other most important substantive rights provided to qualifying investors in this country?

Mozambique

Issue

Other substantive protections

Free transfer of payments

All BITs contain a clause of free transfer of payments by investors.

Non-impairment

Most Mozambican investment treaties include non-impairment clauses, whereby the Contracting Parties must refrain from taking measures capable of impairing the management, maintenance, use, enjoyment or disposal of investments, with the exception of the France, Brazil and India BITs.

Armed conflict or civil unrest

Except for the Zimbabwe BIT, all investment treaties provide investors with a right to compensation for losses resulting from armed conflict or civil unrest in the territory of a Contacting Party.

Transparency

Some investment treaties (Sweden, USA, Finland, Japan and Belgium-Luxembourg BITs) provide that any legislation or decision ‘that pertain to or affect investment covered by [the] Agreement are promptly published or otherwise made publicly available’.

The SADC’s MIT provides that each Contracting Party shall promote and establish predictability, confidence, trust and integrity by adhering to and enforcing open and transparent policies, practices,

regulations and procedures as they relate to the investment.

General exceptions

The USA BIT expressly determines that the provisions included in the BIT can not be construed as preventing the Contracting Party from adopting measures that it considers necessary with respect to international peace and security.

Furthermore, Finland BIT foresees a similar exception for maintenance of public order and for the protection of essential security interests in time of war or armed conflicts, or other emergency in international relations.

The Mauritius BIT also expressly refers that its provisions do not limit the right of either Contracting Party to apply prohibitions or restrictions of any kind or take any other action which is directed to the protection of its security interests, or to the protection of public health or the prevention of diseases and pest in animals or plants. The same exception is expressly agreed in the Japan BIT which also specifies the adoption of measures imposed for the protection of national treasures.

The SADC’s MIT states that the MIT shall not be construed as preventing a Contracting Party from exercising its right to regulate in the public interest and to adopt, maintain or enforce any measure that it considers appropriate to ensure that investment activity is undertaken in a manner sensitive to health, safety or environmental concerns.

Licenses/authorisations

The Switzerland, Finland, Mauritius, South Africa, Spain and Egypt BITs expressly provide that the Contracting Parties should grant licences and authorisations necessary in connection with the carrying out of investments in its territory.

Immigration

Investment treaties such as China, Sweden, USA, Vietnam, Japan, Germany, India, Belgium-Luxembourg and OIC include obligations to facilitate immigration of personnel and their families in relation to investments.

Procedural rights in this country’s investment treaties

10. Are there any relevant issues related to procedural rights in this country’s investment treaties?

Mozambique

Issue

Procedural rights

Fork-in-the-road

Some BITs (eg USA and Switzerland) and OIC’s MIT contain fork-in-the-road provisions, whereby investors may only pursue their claims through one of the remedies available.

Waiver of local remedies

The Japan BIT explicitly provides that the investor must withdraw its claim from local remedies in order to resort to arbitration.

Exhaustion of domestic remedies

The Zimbabwe BIT provides that the investor must exhaust domestic remedies before resorting to arbitration, whilst the China BIT provides that the host State may require the investor to exhaust such remedies.

ICSID and ad hoc arbitration

The vast majority of Mozambican BITs and SADC’s MIT provide that the investor may choose between initiating an ICSID or ad hoc arbitration. However, the Netherlands, UK, Zimbabwe and France BITs only provide for ICSID arbitration, while the Germany BIT and OIC’s MIT only provide for ad hoc arbitration.

Time limits

The Japan BIT establishes a time limit of 3 years for commencement of arbitration proceedings.

11. What is the status of this country’s investment treaties?

Mozambique

All of Mozambique’s BITs can be unilaterally terminated by a Contracting Party at any time after the end of the initial term of the treaty, usually of 10 years (15 years in the BITs concluded with Germany and France, 20 years in the BITs concluded with Switzerland, Vietnam, Brazil and Sweden).

As to the OIC’s MIT, any Contracting Party may withdraw from it after five years from its coming into force. However, the withdrawal will only become effective one year after the date of notification of the withdrawal to the Secretary General.

As for the SADC’s MIT, any Contracting Party may withdraw from it upon the expiration of 12 months from the date of the notice of withdrawal.

All BITs, with the exception of Brazil’s, also include a clause whereby treaty application is extended to existing investments for a further period (usually from 5 to 20 years) from the date of termination.

Practicalities of commencing an investment treaty claim against this country

12. To which governmental entity should notice of a dispute against this country under an investment treaty be sent? Is there a particular person or office to whom a dispute notice against this country should be addressed?

Mozambique

Government entity to which claim notices are sent

The BITs/MITs do not stipulate upon whom a dispute notice should be served. There are no clear rules on this regard in the Mozambican relevant legislation.

13. Which government department or departments manage investment treaty arbitrations on behalf of this country?

Mozambique

Government department which manages investment treaty arbitrations

The Mozambique Ministry of Fisheries is representing the Republic of Mozambique in the only investment treaty claim (related to the Agriculture, Fishing and Forestry economic sector) against Mozambique that we are aware of.

14. Are internal or external counsel used, or expected to be used, by the state in investment treaty arbitrations? If external counsel are used, does the state normally go through a formal public procurement process when hiring them?

Mozambique

Internal/external counsel

On the investment treaty arbitration proceedings involving Mozambique, initiated on 3 July 2014 (ICSID Case No. ARB(AF)/14/2), Mozambique is being represented by external counsel.

Practicalities of enforcing an investment treaty claim against this country

15. Has the country signed and ratified the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)? Please identify any legislation implementing the Washington Convention.

Mozambique

Washington Convention implementing legislation

Mozambique has adopted the Washington Convention. There is no specific implementing legislation.

16. Has the country signed and ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the New York Convention)? Please identify any legislation implementing the New York Convention.

Mozambique

New York Convention implementing legislation

Mozambique has adopted the New York Convention with the provision of enforcing awards rendered in another contracting state’s territory on the basis of reciprocity. There is no specific implementing legislation.

17. Does the country have legislation governing non-ICSID investment arbitrations seated within its territory?

Mozambique

Legislation governing non-ICSID arbitrations

Lei do Processo Administrativo Contencioso (Law No. 7/2014, of 28 February), Lei Orgânica dos Tribunais Administrativos (Law No. 25/2009, of 28 September), Lei da Arbitragem, Conciliação e Mediação (Law No. 11/99 of 8 July 1999).

18. Does the state have a history of voluntary compliance with adverse investment treaty awards; or have additional proceedings been necessary to enforce these against the state?

Mozambique

Compliance with adverse awards

We are not aware of any investment treaty awards involving Mozambique.

19. Describe the national government’s attitude towards investment treaty arbitration

Mozambique

Attitude of government towards investment treaty arbitration

At this stage there is still not enough data to sustain an analysis of the government’s attitude towards investment treaty. Despite the several BITs in force, we are only aware of one investment treaty arbitration claim involving Mozambique which is still pending (ICSID Case No. ARB(AF)/14/2).

20. To what extent have local courts been supportive and respectful of investment treaty arbitration, including the enforcement of awards?

Mozambique

Attitude of local courts towards investment treaty arbitration

We are not aware of any investment treaty arbitration awards involving Mozambique.

National legislation protecting inward investments

21. Is there any national legislation that protects inward foreign investment enacted in this country? Describe the content.

Mozambique

National legislation

Substantive protections

Procedural rights

FET

Expropriation

Other

Local courts

Arbitration

Lei do Investimento (Law No. 3/93, of 24 June 1993)

Yes

Yes

Free transfer of payments;

Fiscal benefits.

Yes

Yes

Lei dos Petróleos

(Law No. 21/2014, of 18 August)

No

Yes

-

Yes

Yes

Lei de Minas

(Law No. 20/2014, of 18 February)

No

Yes

-

No

No

National legislation protecting outgoing foreign investment

22. Does the country have an investment guarantee scheme or offer political risk insurance that protects local investors when investing abroad? If so, what are the qualifying criteria, substantive protections provided and the means by which an investor can invoke the protections?

Mozambique

There is no legislation protecting outgoing foreign investment.

Awards

23. Please provide a list of any available arbitration awards or cases initiated involving this country’s investment treaties.

Mozambique

Awards

We are not aware of any investment treaty arbitration awards involving Mozambique.

Pending Proceedings

Oded Besserglik (South African) v Mozambique Ministry of Fisheries (ICSID Case No. ARB(AF)/14/2), Mozambique – South Africa BIT.

Reading List

24. Please provide a list of any articles or books that discuss this country’s investment treaties.

Mozambique

Notes

* The authors would like to thank Gonçalo Hogan and João Marecos for their valuable contribution to this publication.

1 According to the Information available, there are two additional treaties with Cuba and the United Arab Emirates. However, the treaties are not available.

2 There are substantial differences between the Portuguese and English versions of Article 10 of the BIT regarding disputes between an Investor and a Contracting Party. According to the English version the Parties waive the right to demand the exhaustion of domestic remedies whereas the Portuguese version provides for an obligation of exhausting all domestic remedies prior to arbitration proceedings. According to rules established in the agreement, the English version prevails in case of divergence.

3 The Brazil BIT only provides for dispute resolution mechanisms between the Contracting Parties

4 Idem.

5 Idem.

6 Only available in the English version, which, according to the agreement, prevails in case of divergence.

7 Arbitration is only available in case of disputes involving compensation resulting from expropriations, nationalisations or measures having equivalent effect.

8 After exhaustion of domestic remedies.

9 Although conciliation is mandatory before resorting to arbitration, the OIC’s MIT does not provide for a specific time period.

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