October 09, 2006	Monday	Ramazan 15, 1427

WHAT the western corporate world failed to achieve by trying the abortive device of the Multilateral Agreement on Investment (MAI) in mid-1990s and later through institutional mechanism of the WTO in recent years, now happens to be within its reach and that too without much hassle, thanks to the more effective tool of bilateral free trade or investment treaties.

That for the businesses of industrialised states to enter a country like Pakistan, the legal structure there must be investor-friendly goes without saying. In this case, the readiness to comply with the investor-state’s harsh terms is amazing for every developing country is too anxious to seek US investment. But this cannot be put in place the way colonial officers did in India.

The courts were then simply asked to, rather ordered to, change the laws. Now, the native judicial officers are to be sensitised, new laws to be promulgated by the local authorities and that the technical assistance for this purpose to be provided “on the request” of the host (client) government.

It was in this backdrop that a two-day “Judicial Conference on Adjudication on Intellectual Property disputes in Pakistan” was held at the Federal Judicial Academy, Islamabad on September 18. Though organised locally, the key sponsors were the US Commercial Law Development Programme (CLDP) and the United States Patent and Trade Mark Office in Pakistan.

The conference aimed at sensitisation of serving and newly entrant judicial officers from different parts of the country. It is interesting to note that Ryan C. Cracker, US Ambassador in Pakistan, himself inaugurated it and the moderator of the programme was John Sullivan, General Counsel, US Department of Commerce. Another key speaker was Thomas Moritz, Attorney Advisor, CLDP.

The three-year CLDP Pakistan programme is part of the five-year $3 billion economic development and defence aid initiative announced by President Bush in June 2003. This programme is supported by USAID and aims at strengthening intellectual property rights (IPR) protection (of US businesses in particular) in Pakistan, capacity building of local judiciary, support for IP pubic awareness and legal reforms.

According to Moazzam Hayat, Director-General, Federal Judicial Academy, the main objective of this programme is to train Pakistani judicial officers in the application of intellectual property laws. Normally, the US wants Trips-plus laws in its partner (client) countries.

The CLDP is a programme of the US Department of Commerce designed to effectively improve the legal and regulatory environment in the client country for US companies operating there. It trains local lawmakers, regulators, judges, lawyers, and educators for the purpose.  It also assists in revision of the commercial laws there to make them compatible with WTO or FTA-BIT needs. Since its inception, CLDP has worked with more than 50 foreign governments providing thousands of seminars, workshops and consultative services.

The CLDP’s programmes often help produce positive results for the US investors. For instance, in 2004, the American company, Procter & Gamble’s (P&G), said that  the CLDP’s judicial capacity building programme had played a crucial  role in changing the legal environment for IPR enforcement in Algeria.  The company noted that the judge who issued two landmark decisions in favour of P&G that year applied important enforcement expertise gained through CLDP’s judicial training programme.  The judgments enormously raised P& G’s sales in Algeria. 

In July 2005, the CLDP organised an open and constructive dialogue between corporate counsels of Microsoft, Amazon, Starbucks, and Boeing, and officials of Bahrain’s Ministry of Industry and Commerce on the key legal principles, the former needed to see in a foreign country’s company laws in order to expand into that country.

However, Islamabad has already been religiously pursuing the task of amending the country’s legal structure to make it compatible with requirements of the WTO and the US-Pakistan Bilateral Investment Treaty which is still at negotiating stage. (A meeting between the officials of the two sides is scheduled to be held in coming days to finalise the treaty.) This enthusiastic readiness to open up the economy to foreign investors at the latter’s terms has, however, yet to yield any satisfactory results.

It was in this backdrop that on December 4 last year, the government had promulgated an ordinance to provide for the recognition and enforcement of arbitration agreements and foreign arbitral awards to fulfil the obligations under the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards to which Pakistan is a signatory. It also repealed the Arbitration (Protocol and Convention) Act 1937.

Earlier, Prime Minister Shaukat Aziz had stated on Nov 15 at a conference on ‘privatization of justice’ in Islamabad that an arbitration centre will be set up to be run by private sector. The objective of the centre was to resolve disputes through mediation, and failing mediation through arbitration.

In May last year, the four provincial high courts were empowered to adjudicate foreign investment disputes under a new law passed by the National Assembly. The Foreign Private Investment (Promotion and Protection) Bill set a maximum of six months for a high court to give its final judgement, which will be subject to appeal before the Supreme Court. It was an amendment of the 1976 Act and provided for transfer of all proceedings pending before any court or forum other than the Supreme Court to the high court concerned.

The bill, which the government said was designed to raise foreign investors’ confidence in Pakistan’s judicial process, was to be passed by the Senate to become law. Under it, a high court “shall exercise exclusive civil jurisdiction” to adjudicate and settle “all matters related to, arising from or under or in connection with” the 1976 Act and those transferred to it under the new bill.

Another bill published by the government this year and called the High Courts (Practice and Procedure) Act, 2006, proposes to create three divisions in each high court —- civil, commercial and criminal.

The commercial division will hear cases arising out of transactions in trade and commerce, foreign investment, negotiable instruments, transportation of goods, exploitation of oil and gas, etc. Hearing was to take place on a day-to-day basis and to continue till completion. Such an approach has been tried in the past too in respect of other laws and has not produced any meaningful results.

The western states and their corporate sector had to turn to bilateralism after their efforts to achieve the objective of unrestrained entry into economies of the developing and poor countries met dismal fate. Their failure to do so by bending or dictating the rules in the WTO is a recent happening. Therefore, their anxiety to take up the Singapore issues and get them passed quickly was mind-boggling and was aptly rebuffed by a group of poor African countries at Cancun ministerial. But the adverse reaction their Multilateral Agreement on Investment (MAI) project received was too unexpected and disappointing for the West.

The MAI began in 1995, when the 29 mostly high-income countries that make up the Organization for Economic Cooperation and Development (OECD) started negotiating the agreement in secret. In fact, few citizens, activists, and even legislators were aware of its existence until 1997, when a source inside the OECD leaked a copy of the agreement to the Council of Canadians, an independent citizens’ group. The council in turn passed the information on to several NGOs.

Nevertheless, as the word spread around, the MAI came under fire from various citizens’ movements so much so that negotiations were stalled twice and France pulled out altogether in October, 1998. Two months later, the OECD made a formal announcement stating they are no longer conducting negotiations on the MAI. One reason for this was that whenever governments from the industrialised countries looked for a new venue to hold talks on the MAI, the anti-globalisation groups around the world used to gather in large numbers and come up with new, inventive ways to ensure that the MAI was a failure.

The overall purpose of this agreement was to facilitate the movement of assets — whether money or production facilities — across international borders. But it was observed that it will accelerate the “race to the bottom” in environmental and labour standards, increase global financial instability, and further concentrate wealth and power in large trans-national corporations.

Like other international treaties, the MAI also drew up a series of rights and responsibilities. But unlike other treaties, the rights were to go only to foreign investors, while the responsibilities were to be shouldered by governments only.