Title
ECOWAS Common Investment Code (ECOWIC)
Preamble
PREAMBLE
THE HIGH CONTRACTING PARTIES
MINDFUL of Articles 7, 8 and 9 of the Revised ECOWAS Treaty establishing the Authority of Heads of State and Government and defining its composition and functions;
MINDFUL of Article 3 of the Revised ECOWAS Treaty stipulating the areas in which the Community should focus its activities in order to achieve its aims and objectives;
MINDFUL of the Supplementary Act A/SA.3/12/08 Adopting Community Rules On Investment and the Modalities for their Implementation within ECOWAS;
RECOGNIZING that the development of a more vibrant and dynamic private sector can help to create job opportunities, promote technology transfer, support long-term economic growth and contributes effectively to the fight against poverty;
ANXIOUS to promote and consolidate within ECOWAS an environment conducive to the development of the activities of the private sector and to make the latter a genuine engine of economic growth;
DESIRING to promote further the trade and investment existing between and amongst the Member States;
RECOGNIZING the importance of fostering a conducive and predictable environment for international trade and investment;
RECOGNIZING the vision, aims and objectives of the ECOWAS Investment Policy
TAKING into account membership of some of the Member States in other international organisations such the World Trade Organization (WTO) and noting that this Code is without prejudice to the rights and obligations of the Member States where applicable, under suchâagreements, understandings, and other instruments relating thereto or concluded under the auspices of the WTO;
RECOGNIZING the potential benefits to each Party resulting from increased international trade and investment;
RECOGNIZING the essential role that both domestic and foreign private investment when accompanied by appropriate environmental and labour policies, can play in the sustainable development of the Parties, including in reducing poverty, increasing productive capacity, furthering growth, creating jobs, expanding trade, improving technology and transfer of technology, furthering human rights and human development and enhancing economic development;
SEEKING to promote, encourage and increase investment opportunities that enhance sustainable development goals within the territories of the Parties;
UNDERSTANDING sustainable development requires the fulfilment of the economic, social and environmental pillars that are embedded within the concept;
FURTHER RECOGNISING the right of each Member State to establish its own level of domestic environmental protection and its own sustainable development policies and priorities;
DESIRING to encourage and facilitate private sector and business contacts between and amongst the Parties;
NOTING that national investment codes in force in Member States offer investors different incentives and protection measures;
CONVINCED of the need to establish within the ECOWAS region, reliable, transparent, harmonised and predictable conditions for investments;
DESIROUS of adopting common regional rules on investments and defining the modalities for its implementation, in order to achieve the afore-mentioned objectives;
TAKING into account the need to eliminate non-tariff barriers in order to facilitate greater access of investors to the markets of the Parties and the mutual benefits thereof;
CONSIDERING that it would be in the respective interests of the Parties to establish a mechanism between the Parties for encouraging the liberalisation of trade and investment between and amongst them, including through the appropriate regional bodies and mechanisms;
DESIRING to ensure that trade and environmental policies are mutually supportive in furtherance of sustainable development;
AFTER THE OPINION of the ECOWAS Parliament;
ON THE RECOMMENDATION of the Session of the Council of Ministers, held in........ from...............to..........
TO THIS END, THE PARTIES AGREE AS FOLLOWS:
Chapter 1.. GENERAL PROVISIONS
Article 1.. Definitions
Under this Code:
(a) "Annex Scheduled List" means schedules of excluded sectors or any other list approved by Member States from time to time
(b) "Commission" means the executive body of the Economic Community of West African States;
(c) "Community" means the Economic Community of West African States;
(d) "Community citizen or citizens" means any national(s) of Member States who satisfy the conditions stipulated in the Protocol defining Community citizenship;
(e) "Enterprise or company" means any entity duly constituted or otherwise incorporated under the applicable laws and regulations of any ECOWAS Member State, provided it maintains substantial business activity in the Member State in which it is located, whether privately or governmentally owned or controlled;
(f) "Home State" means a Member State of ECOWAS from where the investment or the investor originates;
(g) "Host State" is the ECOWAS Member state where the investment is located and / or undertake.
(h) "Investment" means an enterprise or a company as defined in paragraph (e), which is established, acquired, or expanded by an investor, having business or commercial operations or other interests such as:
i. a company or an enterprise;
ii. shares, stocks or other forms of equity participation in a company or an enterprise, and bonds, debentures and other forms of debt interests in a company or an enterprise;
iii. contractual rights such as turnkey, construction, management contracts, production or revenue-sharing contracts, concessions or other similar contracts;
iv. tangible property, including real property; and intangible property, including rights such as leases, mortgages, liens and pledges or such other securities
v. similar assets or rights conferred pursuant to law of a Member State provided that
* such investments are not in the nature of portfolio investments which shall not be covered by this Code;
* there is a significant physical presence of the investment in the host State;
* the investment in the host State is made in accordance with the laws of that host State;
* the investment is part or all of a business or commercial operation; and the investment is made by an investor as defined in this Code.
For greater certainty, investment does not include:
(i) Debt securities issued by a government or loans to a government;
(ii) Portfolio investments;
(iii) Claims to money that arise solely from commercial contracts for the sale of goods or services by a national or enterprise in the territory of a Member State to an enterprise in the territory of another Member State, or the extension of credit in connection with a commercial transaction, or any other claims to money that do not involve the kind of interests set out in Subparagraphs (i) through (v) above;
(iv) Investments of a speculative nature;
(v) Investments in any sector sensitive to its development or which would have an adverse impact on its economy;
(vi) Commercial activities.
In order to qualify as an investment under this Code, the investment must have the following characteristics: substantial business activity according to Paragraph e, commitment of capital or other resources, the expectation of gain or profit, the assumption of risk, and a significant contribution to the host State's economic development. Substantial business activity requires overall examination, on a case by case basis, of all the circumstances, including, inter alia: the amount of investment to be brought into the host state; the number of jobs to be created; its effect on the local community; the length of time the business has been in operation
(i) "Investor" is any individual, company or enterprise legally originating from any Member State of ECOWAS or an individual, company or enterprise from a third country that has made an investment in a Member State ;
(j) "Labour legislation" means legislation, or provisions thereof, that are directly related to the following internationally recognised labour rights:
(i) the right of association; (ii) the right to organise and bargain collectively; (iii) prohibition on the use of any form of forced or compulsory labour;
(iv) minimum age for the employment of children;
(v) acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health;
(k) "Measures" means any legal, administrative, legislative, judicial or policy decision that is taken by the host State, directly relating to and affecting an investment in the host State;
(I) "Member State (s)" means any Member State or Member States of ECOWAS as defined in Article 2, Paragraph 2, of the Revised ECOWAS Treaty;
(m) "National" means a person who is a citizen of any Member State of ECOWAS;
(n) "Portfolio investment" refers to any investment where the investor owns less than 10 per cent of shares in a company, either made through a stock exchange or otherwise, does not give the portfolio investor the possibility to exercise effective management or influence on the management of the investment;
(o) "Public official(s)" means any person who has been selected, appointed or elected and who performs public functions on a permanent or temporary basis. This includes persons who, at the national, regional or local level holds a legislative, administrative, judicial or military office, or who, performing a public function, is an employee of a Government or of a public or governmental authority or agency or who otherwise performs a public activity or function in the name of the State or in the service of the State, at any level of its hierarchy;
(p) State contracts are contracts entered into between a Member State or the State's agents and the investor or investors conferring contractual rights pursuant to the definition of an investment under this Code ;
(q) "Third Country" is any country which is not a member of ECOWAS
Article 2. Objectives
(1) The objective of this code is to establish in the ECOWAS territory, transparent, harmonized and predictable legal and institutional framework that applies to investment and to any investment-related measures designed to implement the ECOWAS Investment Policy.
(2) To this end, this code seeks to:
a) promote, facilitate, and protect investment that foster sustainable development of the region and in particular, the Member State in which the investment is located
b) promote the adoption of common regional rules on investments and define the modalities for their implementation, in order to achieve the aforementioned objective;
c) improve investment and trade relations with and within the region and between the region and foreign investors, conducive to regional stability and sustainable development;
d) enhance the role of both domestic and foreign direct investments in reducing poverty, increasing productive capacity, furthering growth, creating jobs, expanding trade, improving technology and transfer of technology, furthering human rights and human development, enhancing economic development; among others;
Article 3. Scope and Application
(1) This Code applies to the rights and obligations of Member States and investors.
(2) This Code applies to any measure adopted or maintained by a Member State, after the entry into force of this Code.
(3) This Code does not create retroactive obligations for Member States and investors.
Chapter 2. STANDARDS OF TREATMENT TO INVESTORS
Article 4. Admission and Establishment
(1) Each Member State shall in admitting an investment into its territory follow the parameters of the investment policy in force at the time the investment is made and in accordance with its national laws and regulations.
(2) Each Member State shall accord investors full rights of entry and establishment to all natural and legal persons engaged in cross-border business, based on the principle of national treatment with the aim of promoting free flows of investment within the region and in accordance with the West Africa Common Industrial Policy.
Article 5. Regulation of Investment
The admission and regulation of investment in any Member State shall be subject to the following conditions:
(a) Investments shall be subject to the laws and regulations of the Host State;
(b) The benefits of this Code shall apply to any investment by the investor in any Member State which is duly approved by the competent authority in accordance with the laws and regulations of the host State(s) ;
(c) Once a Member State admits an investment it shall provide in accordance with its laws and regulations all necessary permits related to such investment.
Article 6. National Treatment
(1) A Member State shall accord to investors of another Member State treatment no less favourable than that, which it accords, in like circumstances, to its own investors with respect to the management, conduct, operation, expansion and sale or other dispositions of investments.
(2) A Member State shall accord to investments from another Member State treatment no less favourable than that which it accords, in like circumstances, to investments ofits own investors with respect to the management, conduct, operation, expansion and sale or other dispositions of investments.
(3) For purposes of this Code, the concept of "in like circumstances" requires an overall examination, on a case by-case basis, of all the circumstances of an investment, including:
(a) its effects on the local community;
(b) its effects on the local, regional or national environment, the health of the populations, or on the global commons;
(c) the sector in which the investor is active;
(d) the aim of the measure in question;
(e) the regulatory process generally applied in relation to a measure in question; and
(f) other factors directly relating to the investment or investor in relation to the measure in question.
Article 7. Exceptions to National Treatment
1. Member States may adopt measures that derogate from the National Treatment principle provided such measures are not arbitrary and subject to the conditions set out in this Article.
2. Any regulatory measure taken by a Member State that is designed and applied to protect or enhance legitimate public welfare objectives, such as national interests, public health, safety and the environment, does not constitute a breach of the National Treatment principle.
3. Member States may, in accordance with their respective domestic legislation, grant preferential treatment to qualifying investments and investors in order to achieve national development objectives.
4. A Member State reserves the right to deny an investor the benefits of this Code where:
(a) The investor does not have substantial business activities in the Member State; or
(b) The investor is engaged in activities inimical to the economic interest of Member States.
5. A Member State may deny national treatment if advantages available within the Member State's economy are made for the exclusive benefit of its own nationals within the framework of its national development programs or its List of scheduled investment sectors where applicable.
6. The National Treatment principle shall not apply:
(a) to subsidies or grants provided to a government or a State enterprise, including government-supported loans, guarantees and insurance; or
(b) to taxation measures aimed at ensuring the effective collection of taxes, except where this results in arbitrary discrimination.
7. In accordance with national laws and regulations, Member States may accord more favourable treatment to address the internal needs of designated disadvantaged persons, groups or regions.
8. The implementation of these exceptions shall not entitle any investor to compensation for any competitive disadvantages they may suffer.
Article 8. Most-Favoured-Nation Treatment
(1) Each Member State shall accord to investors of another Member State treatment no less favourable than that it accords, in like circumstances, to investors of any other Member State with respect to the management, conduct, operation, expansion, sale or other disposition of investment.
(2) Each Member State shall accord to investments made by investors of another Member State treatment no less favourable than that it accords, in like circumstances, to investments made by investors of any other Member State with respect to the management, conduct, operation, expansion, sale or other disposition of investments.
(3) Paragraphs (1) to (2) above do not oblige a Member State to extend to the investors of a third country the benefit of any treatment, preference or privilege contained in:
(a) The existing or future customs union, free trade area, common market agreements, or any international agreement to which the investor's home State is not a Party, or
(b) Any international agreement or domestic legislation relating wholly or mainly to taxation.
(4) For greater certainty, the "treatment" referred to in Paragraphs 1 to 3, does not include dispute settlement procedures provided for in other treaties. Substantive obligations in other treaties do not in themselves constitute "treatment", and thus cannot give rise to a breach of this Article.
Article 9. Exceptions
(1) General Exceptions
Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Member States or their investors in like circumstances, nothing in this Code shall be construed to prevent the adoption or enforcement by any Member State of measures taken in good faith and designed and applied:
(a) to protect public morals or to maintain public order;
(b) to protect human, animal, or plant life or health;
(c) to secure compliance with the national laws or regulations which are not inconsistent with this Code, including those relating to:
(i) for the prevention of deceptive and fraudulent practices to deal with the effects of a default on a contract;
(ii) to the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts; or
(iii) for safety reasons ;
(d) to ensure the equitable or effective imposition or collection of direct taxes in respect of investors of another Member State and their investments;
(e) to protect national treasures of artistic, historic, or archaeological value;
(f) for the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption.
(g) to promote the achievement of equality in its territory, land planning, or designed to protect or advance categories of disadvantaged persons.
(h) to preserve and promote cultural and linguistic diversity.
(i) to preserve and protect the biodiversity and the rights of local communities, in conformity with the relevant multilateral instruments.
(2) Security Exceptions Nothing in this Code shall be construed to:
(a) require any Member State to furnish any information, the disclosure of which it considers contrary to its essential security interests; or
(b) prevent any Member State from taking any action which it considers necessary for the protection of its essential security interests, including, but not limited, to:
(i) action relating to fissionable and fusionable materials or the materials from which they derived ;
(ii) action relating to the traffic in arms, ammunition, and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;
(iii) action taken in time of war or other emergency in domestic or international relations;
(iv) action taken so as to protect critical public infrastructure, including communication, power, and water infrastructure, from deliberate attempts intended to disable or degrade such infrastructure; or
(c) prevent any Member State from taking any action pursuant to its obligations under the United Nations Charter for the maintenance of international peace and security.
(3) Subject-Specific Exceptions
(a) A Member State may, in exceptional financial, economic or industrial circumstances, adopt any exceptional measure in the sectors or with respect to the matters specified in its Annex of schedules of excluded sectors or any other list as maybe approved by Member States from time to time, provided that such are consistent with the provisions of this Code.
(b) Nothing in this Code shall be construed to prevent a Member State from adopting or maintaining measures that restrict transfers when the Member state experiences serious balance of payments difficulties.
(c) Restrictions imposed on transfers related to trade in goods, shall not substantially impede those transfers from being made in a freely usable currency at a market rate of exchange and may not take the form of tariff surcharges or similar measures.
(d) An interested Member State shall prior to the entry into force of the exceptional measure:
(i) endeavour to notify the other Member State of the elements of the exceptional measure as set out;
(ii) provide, upon request by that other Member State, particulars of the exceptional measure to that other Member State ;
(iii) allow that other Member State reasonable time to make comments in writing;