Important companies headquartered in Peru are nowadays investing in countries of the Pacific Alliance. This is the case of Alicorp and the Gloria Group in Colombia; Brescia Group in Chile; Belcorp in Colombia, Mexico and Chile, as well as Ajegroup in Mexico and Colombia. Likewise, several Chilean, Colombian and Mexican companies are investing in other member countries. Hence Peru, Chile, Colombia and Mexico not only currently receive foreign investment, but also export investment towards other countries of the Pacific Alliance.
In this sense, the Pacific Alliance set up a framework agreement containing an additional protocol ‑ still not in force ‑, establishing a free trade zone (a free trade agreement), which provides for a series of chapters.
Chapter 10 of the additional protocol is similar to a multilateral investment treaty applicable to the four member States. It confers rights and protections upon investors of a certain State party in order to invest in another member State, such as the rights to fair and equitable treatment, protection against illegitimate expropriation, national treatment and the most favored nation treatment. In addition, investors can rely on a mechanism for resolving disputes that may arise between such investors and the host-countries.
Given that the Pacific Alliance countries established between themselves a series of free trade agreements (FTA) with investment provisions — this is the case of Peru, which, in addition to the FTA, also entered into a bilateral investment treaty with Colombia –, the introductory provisions of the additional protocol stipulate the parties intention to allow the coexistence between current international agreements and the additional protocol. Hence, if a State party considers that a provision of the additional protocol is incompatible with a provision of another treaty done by that party with another country of the Pacific Alliance, such parties should liaise in order to reach a mutually satisfactory solution.
Yet, Chapter 10 of the additional protocol includes in its annexes some concrete limitations to its scope of application. For instance, considering Chile and Peru, the application and interpretation of the article regarding transfer of funds from Chapter 10 of the additional protocol is subject, and therefore depends upon, the provisions of the annex regarding payments and transfers of the investment chapter of the Peru-Chile FTA.
Therefore, Chapter 10 (Investment) of the additional protocol coexists with other investment chapters of FTAs entered into by and between the member countries of the Pacific Alliance. Maybe it would be convenient that Chapter 10 of the additional protocol superseded the other investment chapters of the existing FTAs in order to establish a consistent and unified system of investment protection applicable to the four countries of the Alliance. This should be further analyzed, but its application and functioning should for now gradually be clarified with the passing of time.
[This article first appeared in the newspaper El Peruano on 3 October 2014]