Title

ECOWAS Supplementary Act on Investments

Preamble

THE HIGH CONTRACTING PARTIES

MINDFUL of Articles 7, 8 and 9 of the ECOWAS Treaty as amended establishing the Authority of Heads of State and Government and defining its composition and functions;

MINDFUL of Article 3 of the ECOWAS Treaty stipulating the areas in which the Community should focus its activities in order to achieve its aims and objectives;

RECOGNIZING that the development of a more vibrant and dynamic private sector helps 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;

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, stable and predictable conditions for investments;

DESIROUS of adopting common regional rules on investments and defining the modalities for their implementation, in order to achieve the afore-mentioned objectives;

HAVING CONSIDERED the opinion of the ECOWAS Parliament;

ON THE RECOMMENDATION of the sixty first ordinary session of the Council of Ministers, held in Ouagadougou from 27 29 November 2008.

AGREE AS FOLLOWS:

Body

Chapter I. General Provisions

Article 1. Definitions

(a) "company" means any corporate entity constituted or organized under the applicable law of any ECOWAS Member State, whether or not for profit, and whether privately or govemmentally owned or controlled;

(b) "national" means a person who is a citizen of any Member State of ECOWAS;

(c) "investment" means

i) a company;

ii) shares, stock and other forms of equity participation in a company, and bonds, debentures and other forms of debt interests in a company;

iii) contractual rights, such as under turnkey, construction or 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 on real property;

v) rights conferred pursuant to law, such as licences and permits provided that:

- Such investments are not in the nature of portfolio investments which shall not be covered by this Supplementary Act;

- 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 herein.

(d) "investor" is any individual or company of any Member State of ECOWAS or a company that has invested or is making an investment in the territory of a Member State;

(e) "measures" includes any legal, administrative, legislative, judicial or policy decision that is taken by the host State, directly relating to and affecting an investment in the territory of the host State, but does not include measures in draft form;

(f) Member State, means a State of ECOWAS

(g) "home State" means a Member State of ECOWAS from where the investment or the investor comes;

(h) "host State" is the ECOWAS Member state where the investment is located;

(i) "ECOWAS" means the Economic Community of West African States whose creation was reiterated by Article 2 of the Revised Treaty.

(J) "Third Country" is any other State which is not a member of ECOWAS

(k) "ILO" means the International Labor Organisation

Article 2. Adoption of the Regional Instrument

The Community Rules on investment as defined in this Supplementary

Act are hereby adopted.

Article 3. Objective

The objective of the Community Rules on investment is to promote

Investment that supports sustainable development of the region.

Article 4. Scope of Coverage

(l) This Supplementary Act applies to all investments by an investor, whether the investment is made before or after the entry into force of this Supplementary Act.

(2) This Supplementary Act applies to any measure adopted or maintained by a Member State, after the entry into force of this Supplementary Act by a governmental authority of the host State.

(3) This Supplementary Act does not create retroactive obligations or responsibilities for investors. However investors who are not in compliance with on going obligations and responsibilities shall seek to comply with them within twenty four (24) months of the entry into force of this Supplementary Act.

Chapter II. Standards of Treatment to Member States' Investors

Article 5. National Treatment

(1) Each Member State shall accord to investors of another Member State treatment no less favourable than that, which it accords, in like circumstances to any other investor operating in its territory, with respect to the management, conduct, operation, expansion and sale or other disposition of investments.

(2) Each Member State shall accord to investments of investors from another Member State treatment no less favourable than that which it accords, in like circumstances, to investments of its own investors with respect to the, managements, conduct, operation, expansion and sale or other disposition of investments.

(3) The treatment accorded by a Member State under Paragraphs (1) and (2) means, with respect to a local authority, treatment no less favourable than that which it accords, in like circumstances, to investors within the Community.

(4) The concept of "in like circumstances" requires an overall examination, on a case by-case basis, of all the circumstances of an investment, including notably:

a) its effects on third persons and 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 6. Most-favored-nation Treatment

(1) This Article applies to:

a) all measures of a Member State covered by this Supplementary Act, and

b) all the substantive provisions of other international agreements on investment that enters into force after this Supplementary Act has entered into force.

(2) 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 state within the Community with respect to the management, conduct, operation, expansion, sale or other disposition of investments.

(3) 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 of the Community or of a third party with respect to the management, conduct, operation, expansion, sale or other disposition of investments.

(4) Each Member State shall accord to investors of another Member State and to investments made by investors from other Member States, the better of the treatment required by this Article, and the national treatment obligation.

(5) Paragraphs (2) to (4) above do not oblige a State within the Community to extend to the investors of another Member State the benefit of any treatment, preference or privilege contained in:

i) any existing or future customs union, free trade area, common market agreement or any international arrangement relating to the current or future environment to which the investor's home State is not a Party, or

ii) any international agreement or arrangement relating wholly or mainly to taxation or any domestic legislation relating wholly or mainly to taxation.

Article 7. Minimum Regional Standards

(1) Each Member State shall accord to investors from a Member State or their investments, treatment in accordance with customary international law, including fair and equitable treatment and reasonable protection and security under the domestic law. This obligation shall be understood to be consistent with the obligation of ECOWAS Member States.

(2) Paragraph (1) prescribes the customary usage of international law minimum standard of treatment of aliens as the minimum standard of treatment to be accorded to investments. The concepts of "fair and equitable treatment" and "full protection and security" are included within this standard, and do not create additional substantive rights.

(3) Each Member State shall accord to investors and their investments non-discriminatory treatment with respect to measures it adopts or maintains relating to losses suffered by investments in its territory owing to armed conflict or civil strife.

(4) Notwithstanding Paragraph (3), if an investor of a State, in the situations referred to in that Paragraph, suffers a loss in the territory of another Member State resulting from:

i) requisitioning of its investment or part thereof by the latter's forces or authorities; or

ii) destruction of its investment or part thereof by the latter's forces or authorities, which was not required by the necessity of the situation, the host State within the Community shall provide the investor restitution or compensation, which in either case shall be prompt, adequate and effective; and with respect to compensation, shall be in readily convertible form.

Article 8. Expropriation

(1) No Member State may directly or indirectly nationalize or expropriate an investment in its territory ("expropriation"), except:

a) for a public purpose;

b) on a non discriminatory basis;

c) in accordance with due process of law; and

d) on payment of compensation in accordance with Paragraphs (2) to (6).

(2) Appropriate compensation shall normally be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ("date of expropriation"), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value;

(3) Compensation shall be paid without delay and be fully realizable;

(4) Payment should be made in a convertible currency and compensation shall include interest at a commercially reasonable rate for that currency from the date of expropriation until the date of actual payment.

(5) On payment, compensation shall be freely transferable. Awards that are significantly burdensome on a host State may be paid yearly over a period of three (3) years or such other period as may be agreed by the Member States, subject to interest at the rate established by mutual consent.

(6) This Article does not apply to the issuance of compulsory licences granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with applicable international agreements on intellectual property.

(7) A non-discriminatory measure of general application shall not be considered an expropriation of a debt security or loan covered by this Supplementary Act solely on the ground that the measure imposes costs on the debtor that cause it to default on the debt.

Article 9. Senior Management and Boards of Directors

(1) No Member State may require that an investor appoint to senior management positions individuals of any particular nationality.

(2) No Member State may require that some members of the board of directors or any committee thereof, of an investment, be of a particular nationality, or resident in the territory of that State, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment.

(3) Subject to generally applicable rules of entry, no Member State may unduly restrict or prevent the cross-border movement of staff engaged in respect of investments from another Member State.

Article 10. Transfers of Assets

(1) Each Member State shall permit all transfers relating to an investment to be made freely and without delay. Such transfers include:

a) profits, dividends, interest, capital gains, royalty payments, management fees, technical assistance and other fees, returns, physical assets and other amounts derived from the investment;

b) proceeds from the sale of all or any part of the investment or from the partial or complete liquidation of the investment;

c) payments made under a contract entered into by the investor or its investment, including payments made pursuant to a loan agreement;

d) payments made pursuant to Article 8 of this Supplementary Act; and

e) payments arising under any dispute settlement process.

(2) Each Member State shall permit transfers to be made in a freely convertible currency at the market rate of exchange prevailing on the date of transfer with respect to spot transactions in the currency to be transferred.

(3) Notwithstanding Paragraphs (1) and (2), a host State within the Community may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:

a) bankruptcy, insolvency or the protection of the rights of creditors;

b) issuing, trading or dealing in securities;

c) criminal or penal offences;

d) transfers of currency or other monetary instruments; or

e) ensuring the satisfaction of judgments in adjudicatory proceedings

(4) Notwithstanding Paragraph (2), a host State may restrict transfers or returns in circumstances where it could otherwise restrict such transfers under this Supplementary Act.

Chapter III. Obligations and Duties of Investors and Investments

Article 11. General Obligations

(1) Investors and Investments are subject to the laws and regulations of the host State

(2) Investors and investments must comply with the host State measures prescribing the formalities of establishing an investment, and accept host State jurisdiction with respect to the investment.

(3) Investors shall strive through their management policies and practices, to contribute to the development objectives of the host States and the local levels of government where the investment is located.

(4) An investor shall provide such information to a potential host State Party to this Supplementary Act, as that Party may require,

Concerning the investment in question for purposes of decisionmaking in relation to that investment or solely for statistical purposes. The host State shall protect any confidential business information from any disclosure that would prejudice the competitive position of the investor or the investment. Nothing in this Paragraph, shall be construed to prevent any Member State of the Community from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its domestic law.

Article 12. Pre-establishment Impact Assessment

(1) Investors and Investments shall conduct an environmental and social impact assessment of the potential investment. Investors or the investments shall comply with environmental assessment screening criteria and assessment processes applicable to their proposed investments prior to their establishment, as required by the laws of the host Member State for such an investment or the laws of the home State for such an investment. The investor shall comply with the minimum standards on environmental and socio-cultural impact assessment and screening that the Member States shall adopt at the first meeting of the Parties, to the extent that these are applicable to the investment in question.

(2) Investors or the investments shall make the environmental and social impact assessments accessible in the local community and to affected interests in the host State where the investment is intended to be made prior to the completion of the host State measures prescribing the formalities for establishing such investment.

(3) Investors, their investments and host State authorities shall apply the precautionary principle to their environmental and social impact assessment. The application of the precautionary principle by investors and investments shall be described in the environmental and social impact assessment they undertake.

Article 13. Anti-corruption

(1) Investors and their investments shall prior to the establishment of

An investment or afterwards, refrain from involving themselves in corrupt practices as defined in Article 30 of this supplementary Act.

(2) Investors and their investments shall not be complicit in any act described in Paragraph (1) of this article, including incitement, aiding and abetting, and conspiracy to commit or authorization of such acts.

(3) The acts reffered to Paragraph 1 and 2 shall be punishable in conformity with the provisions of Article 30 of this Supplementary Act.

Article 14. Post-establishment Obligations

(1) Investors or investments shall, in keeping with best practice requirements relating to their activities the size of their investments, strive to comply with on hygiene, security, health and social welfare rules in force in the host country.

(2) Investors shall uphold human rights in the workplace and the community in which they are located. Investors shall not undertake or cause to be undertaken, acts that breach such human rights. Investors shall not manage or operate the investments in a manner that circumvents human rights obligations, labour standards as well as regional environmental and social obligations, to which the host State and/or home State are Parties

(3) Investors shall not by complicity with, or in assistance with others, including public authorities, violate human rights in times of peace or during socio-political upheavals.

(4) Investors and investments shall act in accordance with fundamental labour standards as stipulated in the ILO Declaration on Fundamental Principles and Rights of Work, 1998.

Article 15. Corporate Governance and Practices

In accordance with the size and nature of an investment,

(1) Investments shall comply with and maintain national and internationally accepted standards of corporate governance for the sector involved, in particular for transparency and accounting practices.

(2) Investors and relevant public authorities of the host State(s) shall make available to the public, any investment contract or agreement with the host State govemment(s), subject to the law governing the release of confidential business information.

(3) Investors shall, where appropriate, establish and maintain with the local community, liaison processes in accordance with regionally accepted standards.

(4) Where relevant regionally accepted standards of the type described in this Article are not available or have been developed without the participation of member countries, the Community shall establish such standards.

Article 16. Corporate Social Responsibility

(1) In addition to the obligation to comply with:

- All applicable laws and regulations of the host Member State;

- And the obligations in this Supplementary Act and in accordance with;

- The size, capacities and nature of an investment, and taking into account;

- The development plans and priorities of the host State;

- The Millennium Development Goals and;

- The indicative list of corporate social responsibilities agreed by

The Member States.

(2) Where standards of corporate social responsibility increase, investors should endeavour to apply and achieve the higher level standards.

Article 17. Investor Liability

Investors shall be subject to civil actions for liability in the judicial process of their host State for acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host State.

Article 18. Relation of Investor's Liability to Dispute Settlement

(1) Where it is established by a court of competent jurisdiction of the host State that an investor has breached Article 13 of this Supplementary Act, the investor shall not be entitled to initiate any dispute settlement process established under this Supplementary Act. A host or home State may raise this as an objection to jurisdiction in any dispute under this Supplementary Act.

(2) Where an investor is alleged by a host Member State or an intervener in a dispute settlement proceeding under this Supplementary Act to have failed to comply with its obligation relating to preestablishment impact assessment, the tribunal hearing such a dispute shall consider whether this breach, if proven, is materially relevant to the issues before it, and if so, what mitigating or offsetting effects this may have on the merits of a claim or on any damages awarded in the event of such award.