[Senate Executive Report 112-2]
[From the U.S. Government Publishing Office]
112th Congress Exec. Rept.
SENATE
1st Session 112-2
======================================================================
INVESTMENT TREATY WITH RWANDA
_______
August 30 (legislative day, August 2), 2011.--Ordered to be printed
_______
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany Treaty Doc. 110-23]
The Committee on Foreign Relations, to which was referred
the Treaty Between the Government of the United States of
America and the Government of the Republic of Rwanda Concerning
the Encouragement and Reciprocal Protection of Investment,
signed at Kigali on February 19, 2008 (the ``Rwanda BIT'' or
the ``Treaty'') (Treaty Doc. 110-23), having considered the
same, reports favorably thereon with one declaration, as
indicated in the resolution of advice and consent, and
recommends that the Senate give its advice and consent to
ratification thereof.
CONTENTS
Page
I. Purpose..........................................................1
II. Background.......................................................2
III. Summary of Key Provisions........................................2
IV. Entry Into Force.................................................9
V. Committee Action.................................................9
VI. Committee Recommendations and Comments...........................9
VII. Text of Resolution of Advice and Consent to Ratification........13
I. Purpose
Like other U.S. bilateral investment treaties (``BITs''),
the Rwanda BIT is intended to provide protections for investors
that underscore the shared commitment of the United States and
Rwanda to open investment and trade policies. It contains the
standard features of U.S. bilateral investment treaties:
nondiscriminatory treatment; the free transfer of investment-
related funds; prompt, adequate, and effective compensation in
the event of an expropriation; a minimum standard of treatment
in accordance with customary international law; freedom of
investment from specified performance requirements;
prohibitions on nationality-based restrictions for the hiring
of senior managers; and transparency in governance.
The Treaty also provides investors with the opportunity to
resolve investment disputes with a host government through
international arbitration, and it permits one party to the
Treaty to bring an arbitration claim against the other party
concerning the interpretation or application of the Treaty.
And, it sets out an acknowledgement by the Parties that it is
inappropriate to encourage investment by weakening or reducing
the protection afforded in domestic environmental or labor
laws.
II. Background
The United States and Rwanda announced their intent to
negotiate a BIT on June 14, 2007. The BIT negotiations grew out
of consultations between the two countries under the U.S.-
Rwanda Trade and Investment Framework Agreement, signed in June
2006. The proposed BIT is the 47th such treaty signed by the
United States and the first between the United States and a
sub-Saharan African country since 1998. Rwanda was considered a
good candidate for a BIT negotiation, having opened its
economy, improved its business climate, and embraced trade and
investment as a means to boost economic development and help
alleviate poverty.
The Treaty, which was signed by the United States and
Rwanda on February 19, 2008, is expected to reinforce the
efforts of the Rwandan Government's economic reform program. It
was submitted to the Senate for advice and consent to
ratification on November 20, 2008.
The Rwanda BIT is the second BIT negotiated on the basis of
the most recent U.S. model BIT, which was completed in 2004. It
is largely consistent with the U.S. model, which is intended to
encompass certain objectives from the Bipartisan Trade
Promotion Authority Act of 2002 and contains similar provisions
to the investment chapters of recently negotiated free trade
agreements.
III. Summary of Key Provisions
A detailed article-by-article discussion of the proposed
BIT is attached to the Letter of Transmittal from the Secretary
of State to the President, which is reprinted in full in Treaty
Document 110-23. A summary of the key provisions of the
proposed BIT is set forth below.
ARTICLE 1
Definitions
The Treaty defines the term ``investment'' as ``every asset
that an investor owns or controls, directly or indirectly, that
has the characteristics of an investment, including such
characteristics as the commitment of capital or other
resources, the expectation of gain or profit, or the assumption
of risk.'' The definition of investment provides an
illustrative list of different types of investments. A
``covered investment'' is defined, with respect to a party, as
an ``investment in its territory of an investor of the other
party in existence as of the date of entry into force of this
Treaty or established, acquired, or expanded thereafter.''
ARTICLE 2
Scope and Coverage
The proposed BIT applies to measures adopted or maintained
by a party relating to: (a) investors of the other party, (b)
covered investments, and (c) with respect to obligations
involving performance requirements (Art. 8) and investment-
related activities with environmental and labor implications
(Arts. 1213), all investment in the territory of a party.
ARTICLE 3
National Treatment
The Treaty protects investors of a party and their covered
investments from discriminatory measures by the other party
during the full life-cycle of an investment, including the
establishment phase, when investors are attempting to make an
investment. Under Article 3, a party must accord treatment to
investors of the other party and covered investments no less
favorable than that it accords, ``in like circumstances,'' to
its own investors or investments in its territory.
ARTICLE 4
Most Favored Nation Treatment
Each party commits to provide to investors of the other
party and to their covered investments treatment no less
favorable than that which it provides in like circumstances to
investors from any third country and their investments. These
obligations apply with regard to the ``establishment,
acquisition, expansion, management, conduct, operation, and
sale or other disposition of investments.''
ARTICLE 5 AND ANNEX A
Minimum Standard of Treatment
Article 5 establishes a minimum standard of treatment that
each party owes to covered investments. Under that standard,
the Parties are obligated to treat covered investments ``in
accordance with customary international law, including fair and
equitable treatment and full protection and security.'' Article
5 contains a number of other provisions further clarifying this
obligation.
``Fair and equitable treatment'' includes the obligation
not to deny justice in criminal, civil, or administrative
adjudicatory proceedings in accordance with the principle of
due process embodied in the principal legal systems of the
world. The obligation to provide ``full protection and
security'' requires the host party to provide the level of
police protection required under customary international law.
The Article further requires that each party must accord to
covered investments of the other party non-discriminatory
treatment with respect to measures adopted in relation to
losses suffered by investments due to armed conflict or civil
strife. In the event that an investor suffers losses as a
result of a party's requisition or unnecessary destruction of
its covered investment, restitution or compensation must be
paid. Article 5 states that a breach of another provision of
the proposed BIT or of a separate international agreement would
not necessarily constitute a breach of this article. Finally, a
footnote to Article 5 provides that the Article shall be
interpreted in accordance with Annex A.
Annex A
Annex A contains the understanding of the Parties that
``customary international law,'' generally and as specifically
referenced in Article 5 (and Annex B), ``results from a general
and consistent practice of States that they follow from a sense
of legal obligation.'' It further provides that, for purposes
of Article 5, the ``customary international law minimum
standard of treatment of aliens refers to all customary
international law principles that protect the economic rights
and interests of aliens.''
ARTICLE 6 AND ANNEX B
Expropriation and Compensation
Article 6 incorporates into the Treaty the customary
international law standard for expropriation. It prohibits
either party from expropriating or nationalizing a covered
investment unless such action is for a public purpose, is taken
in a non-discriminatory manner, in accordance with due process
of law and the minimum standard of treatment set out in Article
5(1) through (3), and is accompanied by prompt, adequate, and
effective compensation. Compensation must be paid without delay
and be equivalent to the fair market value of the expropriated
investment immediately before the expropriation. Footnote 10
indicates that Article 6 shall be interpreted in accordance
with Annexes A and B.
Annex B
Annex B clarifies the understanding of the Parties with
respect to Article 6 and the determination of whether an
expropriation has occurred. Annex B states that an action or
series of actions by a party does not ``constitute an
expropriation unless it interferes with a tangible or
intangible property right or property interest in an
investment.''
Annex B further explains that Article 6 addresses two types
of expropriation: direct expropriation, involving formal
transfer of title or outright seizure, and indirect
expropriation, involving a case-by-case inquiry that considers
the economic impact of the government action, its interference
with investment-backed expectations, and its character.
Finally, Annex B observes that, except in rare circumstances,
non-discriminatory regulatory actions designed and applied to
protect legitimate public welfare objectives do not constitute
indirect expropriations.
ARTICLE 7
Transfers
Article 7 sets out the Treaty's ``free transfer''
obligation. Under this provision, each party is required to
``permit all transfers relating to a covered investment to be
made freely and without delay into and out of its territory.''
Notwithstanding this obligation, a party may prevent a transfer
based on the ``equitable, non-discriminatory, and good faith
application'' of certain laws, including those pertaining to
bankruptcy, securities dealing, and criminal law.
ARTICLE 8
Performance Requirements
Article 8 prohibits the imposition by Parties of
requirements relating to the performance of investments,
including any requirement to achieve a given level or
percentage of exports or domestic content or to transfer
technology, production processes, or other proprietary
knowledge to a person in its territory. The Article also
prohibits Parties from offering advantages, such as a tax
holiday, in exchange for a more limited set of performance
requirements.
The Parties agreed to two footnotes not present in the 2004
Model. First, the Parties agreed to clarify that the
enforcement of a commitment or undertaking to use a particular
technology, a production process, or other proprietary
knowledge is not, by itself, inconsistent with the performance
requirement obligation relating to transfers of technology, a
production process, or other proprietary knowledge. Second, the
Parties agreed to clarify that nothing in Article 8(1) shall be
construed to prevent a party from imposing or enforcing a
requirement or enforcing a commitment or undertaking to train
workers in its territory, provided that such training does not
require the transfer of a particular technology, a production
process, or other proprietary knowledge to a person in its
territory.
ARTICLE 9
Senior Management and Board of Directors
The Treaty prohibits measures requiring that persons of any
particular nationality be appointed to senior management
positions in a covered investment.
ARTICLES 10-11
Publications of Laws and Decisions Respecting Investment and
Transparency in Lawmaking and Administrative Proceedings
Article 10 requires each party to ensure that its laws,
regulations, procedures, and administrative rulings of general
application, and adjudicatory decisions respecting any matter
covered by the Treaty are promptly published or otherwise made
publicly available.
Article 11 includes several provisions aimed at ensuring
transparency. It requires that, to the extent possible, each
party publish in advance laws, regulations, procedures, and
administrative rulings of general application, and provide
interested persons and the other party a reasonable opportunity
to comment on such proposed measures. It further requires a
party, upon the request of the other party, to provide
information and respond to questions pertaining to any actual
or proposed measure that the party requesting the information
considers may materially affect the operation of the Treaty or
its interests under the Treaty. Such information requests will
be made through contact points that each party will designate.
Finally, Article 11 includes detailed provisions concerning
the character of administrative proceedings that impact covered
investments or investors of the other party.
ARTICLES 12-13
Investment in Environment and Labor
In Articles 12 and 13, the Parties acknowledge that it
would be inappropriate to encourage investment by weakening or
reducing the protections afforded in domestic environmental and
labor laws, respectively. This is a relatively new feature of
the 2004 Model BIT that was also contained in the recent U.S.-
Uruguay BIT. Both Articles also provide that a party may
request consultations with the other party if it considers that
the other party has offered such an encouragement. Article 12
provides that nothing in the Treaty shall be construed to
prevent a party from adopting, maintaining, or enforcing any
measure otherwise consistent with the Treaty that it considers
appropriate to ensure that investment activity in its territory
is conducted in a manner sensitive to environmental concerns.
ARTICLE 14 AND ANNEXES I, II, III
Non-conforming Measures
Article 14 establishes the framework for the Treaty's
Annexes of non-conforming measures (NCMs), which provide the
extent to which existing and future domestic measures are, or
may be exempt from, BIT obligations. The Article specifies that
a party may list measures that do not conform to the following
four obligations: National Treatment (Article 3), Most-Favored-
Nation Treatment (Article 4), Performance Requirements (Article
8), and Senior Management and Boards of Directors (Article 9).
In the Annexes, each party lists existing measures to which any
or all of four key obligations of the Treaty do not apply, and
sectors or activities in which each party reserves the right to
adopt future measures to which any or all of those obligations
will not apply.
Annexes I, II, and III
Existing NCMs of both Parties are listed in Annexes I and
III. Annex III is reserved for existing financial services
NCMs, and Annex II contains a list of the sectors or activities
in which the Parties reserve the right to adopt future NCMs.
ARTICLE 16
Non-derogation
Article 16 stipulates that the Treaty does not derogate
from other obligations or laws of a party that entitle an
investor to more favorable treatment than that accorded by the
Treaty.
ARTICLE 17
Denial of Benefits
Article 17 establishes that a party may deny the benefits
of the Treaty to an investor of the other party that is an
enterprise of the other party, and to its investments, if
persons of a third country own or control the enterprise, and
the denying party either (1) does not maintain diplomatic
relations with the third country; or (2) adopts or maintains
measures, such as foreign policy sanctions, with respect to the
third country or to a person of the third country that prohibit
transactions with the enterprise or that would be violated or
circumvented if the benefits of the Treaty were accorded to the
enterprise or to its investments. A party may also deny the
benefits of the Treaty to an investor of the other party that
is an enterprise of such other party and to investments of that
investor if the enterprise has no substantial business
activities in the territory of the other party and persons of a
non-party, or the denying party, own or control the enterprise.
ARTICLE 18
Essential Security
The Rwanda BIT contains a self-judging essential security
exception. Article 18 states that nothing in the Treaty may be
construed to preclude a party from applying measures that it
considers necessary either to protect its own essential
security interests or to fulfill its obligations with respect
to the maintenance or restoration of international peace and
security. The Treaty makes explicit the implicit understanding
that measures to protect a party's essential security interests
are self-judging in nature, although each party would expect
the provisions to be applied by the other in good faith.
Article 18 also clarifies that nothing in the Treaty shall be
construed to require a party to provide or allow access to any
information the disclosure of which it determines to be
contrary to its essential security interests.
ARTICLE 20
Financial Services
Article 20 includes two provisions that relate to the
regulation of financial markets. Paragraph 1 specifies that the
Treaty does not prohibit a party from adopting or maintaining
measures relating to financial services for prudential reasons,
including for the protection of depositors, investors, policy
holders, or persons to whom a fiduciary duty is owed by a
financial services supplier, or for the preservation of the
integrity and stability of the financial system.
Paragraph 2, the monetary and exchange rate policy
exception, establishes that no provision of the Treaty applies
to non-discriminatory measures of general application that may
be taken by a party's central bank or monetary authority
pursuant to monetary and related credit policies or exchange
rate policies.
In the event that an investor-State claim is submitted to
arbitration and the responding party invokes either of these
provisions as a defense, specific provisions in Article 20 will
apply to the dispute. If a party invokes one of the exceptions,
it must within 120 days of the date the investor's claim is
submitted to arbitration submit to the competent financial
authorities of both Parties a written request for a joint
determination on the issue of whether and to what extent one of
the exceptions is a valid defense to the investor's claim. If
the competent financial authorities agree that the defense is
valid, the investor's claim will be barred from arbitration. If
the competent financial authorities fail to reach a
determination by the end of the 120-day period, the tribunal
will decide the issue. Article 20 also contains provisions that
apply to State-State disputes involving financial services.
ARTICLES 23-27
Submitting Investor Claims to Arbitration
Article 24 provides a mechanism for investors to submit to
arbitration a claim that a party has breached an obligation
under Articles 3 through 10 of the Treaty, an investment
agreement, or an investment authorization.
Article 27 provides for the establishment of three-member
arbitral tribunals, with one member appointed by each disputing
party and a presiding arbitrator appointed by agreement between
them. If, within 75 days of the submission of a claim to
arbitration, one of the disputing Parties has failed to appoint
an arbitrator, or the two disputing Parties have failed to
agree on a presiding arbitrator, arbitrators may be named by
the ICSID Secretary-General.
ARTICLES 28-33
Conduct of Investor-State Arbitration
Article 28 provides that, unless otherwise agreed,
arbitrations must take place in a country that is a party to
the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, also known as the New
York Convention. This article authorizes a party that is not
involved in a dispute to make oral or written submissions to
the Tribunal on questions of interpretation of the Treaty.
Article 28 also grants the tribunal the power to address
preliminary questions of law and issue interim measures of
protection to preserve the rights of a disputing party, as well
as interim decisions and awards. Article 29 ensures that all
substantive documents submitted to or issued by the tribunal
shall be made public, with the exception of certain proprietary
or confidential information. Article 30 sets out the governing
law that the Tribunal must follow.
ARTICLE 34
Awards
Under Article 34, when an arbitral tribunal makes a final
award against a responding party, it may award separately or in
combination (1) monetary damages and any applicable interest,
and (2) restitution of property, in which case the award must
provide that the respondent may pay monetary damages and any
applicable interest in lieu of restitution. Punitive damages
are not permitted. A disputing party may seek enforcement of an
award under the New York Convention or the Convention on the
Settlement of Investment Disputes (ICSID Convention). If the
respondent in an arbitration fails to comply with a final
award, the other party to the arbitration may ask a State-State
arbitral panel to determine whether the respondent's failure to
comply is inconsistent with the Treaty.
ARTICLE 37
State-to-State Dispute Settlement
Article 37 provides that any dispute between the Parties
concerning the interpretation or application of the Treaty not
resolved through consultations or other diplomatic channels
shall be submitted on the request of either party to binding
arbitration. Unless the Parties otherwise agree, the
arbitration shall be governed by UNCITRAL arbitration Rules.
State-State arbitration cannot be established for matters
arising under Articles 12 (Environment) and 13 (Labor).
IV. Entry Into Force
The Treaty will enter into force 30 days after the date on
which the Parties exchange instruments of ratification. The
Treaty will remain in force for at least 10 years and will
continue in force thereafter unless one of the Parties
terminates the Treaty. At the end of the 10-year period, or any
time thereafter, a party may terminate the Treaty by giving 1
year's written notice to the other party. Upon termination, the
Treaty will remain in force for an additional ten years with
respect to covered investments that existed at the time of
termination.
V. Committee Action
The committee held a public hearing on the proposed BIT on
November 10, 2009. The hearing was chaired by Senator Kaufman,
and a transcript of that hearing is included as an appendix to
Executive Report 111-3. The committee considered the Treaty on
December 14, 2010, and ordered the Treaty favorably reported by
voice vote, with a quorum present, with the recommendation that
the Senate give advice and consent to its ratification, as set
forth in Executive Report 111-8 and the accompanying resolution
of advice and consent to ratification. Senator Feingold asked
to be recorded as voting against the Treaty. No further action
was taken by the Senate on the Treaty during the 111th
Congress.
The committee held another public hearing on the Treaty on
June 7, 2011. The hearing was chaired by Senator Cardin, and a
transcript of that hearing is included as an appendix to
Executive Report 112-1. The committee considered the Treaty on
July 26, 2011, and ordered the Treaty favorably reported by
voice vote, with a quorum present.
VI. Committee Recommendations and Comments
The committee believes that the Rwanda BIT is in the
interest of the United States and urges that the Senate act
promptly to give advice and consent to ratification.
A. HUMAN RIGHTS IN RWANDA
The executive branch chose to negotiate a BIT with Rwanda,
in part, based on its strong economic reform program, which has
helped to rebuild the Rwandan economy since the 1994 genocide.
The Rwandan government has opened its economy, improved its
business climate, and embraced trade and investment as a means
to boost economic development and help alleviate poverty. As a
result, the Rwandan economy has grown by over 9 percent per
year since 1995. While Rwanda has served as an example of
economic prosperity and stability and it has made genuine
efforts to promote reconciliation after the horrific events of
the 1990s, its human rights record remains more troubling.
There are restraints on judicial independence and limits on
freedoms of speech, press, association, and religion are
widespread. In August 2010, Rwanda's incumbent president, Paul
Kagame, was re-elected with 93 percent of the vote, leading to
increased criticism concerning the state of democracy and
overall lack of opposition in Rwanda politics. The committee
takes such human rights concerns seriously and supports efforts
to help foster democracy throughout the Great Lakes region,
including Rwanda. Senator Kaufman raised this issue during the
November 10, 2009, hearing on the Treaty. In response, Wesley
Scholz, the Director of the Office of Investment Affairs in the
Bureau of Economic, Energy, and Business Affairs at the
Department of State testified:
Rwanda's made admirable advances over the last decade
in economic development and making significant progress
in adjudicating an enormous backlog of genocide cases.
Despite these advances, Rwanda continues to face
significant challenges regarding reconciliation, human
rights, democratization, as it continues its efforts to
rebuild a society torn asunder by war and genocide. The
United States and the international community continue
to work toward the goal of a stable, growing,
democratic Rwanda with improved respect for human
rights. Specifically, the U.S. works with the
Government of Rwanda to open the political space,
increase civil liberties, and to strengthen the
judiciary. The treaty itself can promote economic
development and employment in Rwanda, as well as
improve the rule of law and transparency. These
objectives are complementary to our efforts to work
with the Rwandan government to improve human rights and
democracy in Rwanda. We also continue to use other
channels to raise our views on issues of human rights
and democratization. These include our bilateral
dialogues and other contacts and the Annual AGOA
Country Review and the Department's Annual Human Rights
Report.
The committee shares the administration's view that the
Treaty can improve the rule of law and transparency in Rwanda.
At the same time, it urges the administration to ensure that
promotion of human rights remains an essential aspect of our
bilateral relationship with Rwanda. The committee looks forward
to continued dialogue with the executive branch on this matter.
B. DOMESTIC IMPLEMENTATION OF THE RWANDA BIT
Following the Supreme Court's decision in Medellin v.
Texas, 552 U.S. 491 (2008), the committee has taken special
care to reflect in its record of consideration of treaties its
understanding of how each treaty will be implemented, including
whether the treaty is self-executing.
As noted in Executive Report 110-25, the committee believes
it is of great importance that the United States complies with
the treaty obligations it undertakes. In accordance with the
Constitution, all treaties--whether self-executing or not--are
the supreme law of the land, and the President shall take care
that they be faithfully executed. In general, the committee
does not recommend that the Senate give advice and consent to
treaties unless it is satisfied that the United States will be
able to implement them, either through implementing
legislation, the exercise of relevant constitutional
authorities, or through the direct application of the treaty
itself in U.S. law.
The resolution of advice and consent contains a statement
reflecting the committee's understanding of the extent to which
this Treaty will be self-executing. This provides that Articles
3-10 of the Treaty are self-executing and do not confer private
rights of action enforceable in United States courts. The
remaining provisions of the Treaty are not self-executing and
do not confer private rights of action enforceable in United
States courts.
Among the provisions of the treaty that are not self-
executing are those related to two separate procedures for
resolving disputes under the Treaty. The first of these
procedures allows investors of one party to the Treaty to bring
to binding arbitration claims that the government of the other
party has breached specified provisions of the Treaty. In the
event that such an arbitration resulted in an award against the
United States, the legal authority exists to enforce the award.
Such authorities include the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (TIAS 6697) and related
provisions of the Federal Arbitration Act (9 U.S.C. Sec. 201 et
seq.), as well as the Convention on the Settlement of
Investment Disputes Between States and Nationals of Other
States (TIAS 6090) and related provisions of the Convention on
the Settlement of Investment Disputes Act of 1966 (22 U.S.C.
Sec. 1650a).
The second of these procedures allows the two states
parties to the Treaty (i.e., the United States and Rwanda) to
submit disputes regarding the interpretation or application of
the treaty to binding arbitration. No comparable treaty or
statutory scheme governs the implementation in the United
States of state-to state arbitration awards. In response to a
question for the record on the authorities available to enforce
such awards, Wesley Scholz, the Director of the State
Department's Office of Investment Affairs, provided the
following answer:
State-to-State arbitrations are extremely rare. In
fact, no State-to-State arbitrations have taken place
to date under U.S. bilateral investment treaties.
Nevertheless, there are various tools at our disposal
for implementing a State-to-State award should the
situation arise. Articles 3 through 10 of the BIT and
other provisions that qualify or create exceptions to
these Articles, such as Article 15, are self-executing
but do not confer a private right of action. All
remaining articles of the BIT are non self-executing.
As a result, should an arbitral decision conclude that
U.S. state law is inconsistent with the BIT, the U.S.
government could, if necessary, choose to initiate a
legal action against the state to ensure compliance
with a self-executing provision of the BIT. To the
extent an arbitral decision determines that federal law
is inconsistent with the BIT and an award addresses a
self-executing provision of the BIT, then as long as
the statute in question pre-dated the entry into force
of the treaty, the later-in-time self-executing BIT
provision would prevail over the earlier inconsistent
statute. To the extent an award addresses Article 11 of
the BIT, which is a non-self-executing provision of the
BIT establishing investment protections and subject to
State-to-State arbitration, the U.S. government could
seek legislation where no other existing authority
permitted it to comply with the award or take other
appropriate steps, such as seeking to interpret the
statute in a manner that is consistent with the
arbitral decision. Under current U.S. law, however,
existing federal authorities, for example, the
Administrative Procedures Act, 5 U.S.C. Sec. 551 et.
seq., along with comparable state-level authorities,
adequately ensure compliance with the transparency
standards established in Article 11 of the BIT.
Finally, were a State-to-State tribunal to award money
damages against the United States, funds to satisfy
such an award could be sought from appropriated funds,
if any, or from the Judgment Fund (31 U.S.C. Sec. 1304)
to the extent appropriate. In brief, should a dispute
between the parties lead to arbitration pursuant to the
mechanism provided for in Article 37, there are a
number of options available for implementing State-to-
State arbitral decisions.
Under the approach outlined by the administration, state-
to-state arbitral awards against the United States will not be
directly enforceable in U.S. courts by private parties. Rather,
in most cases (i.e., those involving awards that interpret
Articles 3-10 of the treaty), the executive branch will rely on
the self-executing character of substantive provisions of the
treaty to give effect to arbitral awards that interpret those
provisions. This approach will require U.S. courts to give
substantial weight to the interpretations of such treaty
provisions rendered by arbitral tribunals in cases brought by
the U.S. Government to give effect to such awards. U.S. courts
have not invariably agreed with treaty interpretations rendered
by international courts and tribunals in cases to which the
United States has been a party (See, e.g., Sanchez-Llamas v.
Oregon, 548 U.S. 331 (2006)).
However, in order to give effect to the shared intent of
the Senate and the executive branch that the United States
comply with its obligations in connection with the dispute
settlement provisions of this Treaty and other bilateral
investment treaties to which the United States is already a
party, the committee expects that U.S. courts will not
interpret the substantive provisions of bilateral investment
treaties to preclude the United States giving effect to awards
issued in state-to-state arbitrations to which the United
States is a party if any other possible interpretation is
available. (cf. Murray v. Charming Betsy, 6 U.S. (2 Cranch) 64,
118 (1804) (``an act of Congress ought never to be construed to
violate the law of nations if any other possible construction
remains.'')
There remains a category of disputes that could be referred
to state-to-state arbitration involving provisions of the
Treaty that are not self-executing. Such disputes could arise
under Article 11 of the treaty, which addresses transparency
measures to be taken by the two parties. Because Article 11 is
not self-executing, the executive branch would be unable to
rely on the authority of the Treaty itself as the basis for
giving effect to an arbitral award related to that article. The
executive branch has represented to the committee that existing
federal and state laws regarding transparency measures governed
by the treaty are fully adequate to satisfy U.S. obligations
under the treaty, and that the possibility of an arbitral award
against the United States relating to these provisions is
accordingly extremely remote. In the event of such an adverse
award, the executive branch has observed that it could seek
legislation after the fact to provide the necessary authority
to give effect to the award.
The committee has reservations about the soundness of the
proposed approach for this category of disputes. Waiting until
an actual case arises and an award has been rendered against
the United States to secure authority to comply with the award
leaves matters on an uncertain footing. Complications posed by
the congressional calendar, competing legislative priorities,
and political considerations specific to the case may make it
difficult for the executive branch to seek or to secure such
authority in a timely manner.
In an analogous case--relating to the International Court
of Justice's judgment against the United States in the case of
Avena and Other Mexican Nationals (Mexico v. United States of
America) (I.C.J. Reports 2004, p. 12)--successive
administrations have not formally proposed after the fact
legislation to provide authority allowing the United States to
comply with an adverse judgment. This has left the ability of
the United States to meet its treaty obligations in a state of
uncertainty, and caused concerns for our treaty partners,
including our neighbor Mexico. The committee notes that the
current administration is now actively supporting legislation
to permit compliance with the Avena decision. The committee
remains concerned that failure to put the United States ability
to implement awards relating to non-self-executing provisions
of the proposed Treaty with Rwanda on sounder footing at the
time of ratification of the Treaty creates the risk of this
unfortunate situation repeating itself.
The committee's concerns on this issue--which arise only
with respect to a single, relatively narrow provision of this
Treaty--do not lead it to decline to recommend ratification of
the Treaty. However, the committee urges the executive branch
to review its approach to ensuring compliance with adverse
arbitral awards arising from non-self executing treaties and to
identify effective means to facilitate U.S. compliance with its
treaty obligations.
VII. Text of Resolution of Advice and Consent to Ratification
Resolved (two-thirds of the Senators present concurring
therein),
SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO A DECLARATION
The Senate advises and consents to the ratification of the
Treaty Between the Government of the United States of America
and the Government of the Republic of Rwanda Concerning the
Encouragement and Reciprocal Protection of Investment, signed
at Kigali on February 19, 2008 (Treaty Doc. 110-23), subject to
the declaration of section 2.
SECTION 2. DECLARATION
The advice and consent of the Senate under section 1 is
subject to the following declaration:
Articles 3 through 10 and other provisions that qualify or
create exceptions to these Articles are self-executing. With
the exception of these Articles, the Treaty is not self-
executing.
None of the provisions in this Treaty confers a private
right of action.