Substantive treaty clauses – those that set out obligations of the parties – used to be unspecific and broadly framed, until experience with treaty use and interpretation ushered in a broad change of treaty drafting that is now almost consistently used in newer treaties across the globe. Hundreds of older treaties with unspecific designs, in particular of obligations to grant “fair and equitable treatment” and that offer compensation for “indirect expropriation” and are unspecific about the application of most-favoured nation treatment, remain in force. Even if all treaties that were recently concluded came into force, around 80% of the stock of treaties in force would continue to feature designs of key clauses that are no longer used today. The discussions under Track 2 contribute to a collective understanding of the currently used treaty designs.
Modernising investment treaties (Track 2)
Around 2000 of the investment treaties currently in force were concluded decades ago under different economic circumstances and with different objectives in mind. Experience with these treaties’ use and interpretation has since the early 2000s led to a broad change in how substantive provisions are designed. These newer designs are not replicated in older treaties, however. Under Track 2 of the OECD-hosted work programme on the Future of Investment Treaties, governments from over 100 jurisdictions consider whether it would be better if substantive provisions featured in older generation treaties were more similar to recent designs and how a transition could be achieved in a pragmatic way. This work complements ongoing work at UNCITRAL.
