2015 - Volume 2015 - Issue 2
http://hdl.handle.net/10576/12590
2024-03-29T08:04:03ZAssessing the relevance of multilateral trade law to sovereign investments: Sovereign Wealth Funds as “investors” under the General Agreement on Trade in Services
http://hdl.handle.net/10576/3879
Assessing the relevance of multilateral trade law to sovereign investments: Sovereign Wealth Funds as “investors” under the General Agreement on Trade in Services
Chaisse, Julien
The variety of investments made by powerful Sovereign Wealth Funds (SWFs) is often directed to
the globally booming service sector which is regulated by the General Agreement on Trade in
Services (GATS). This paper analyses the scope, substance and procedural rights which may
benefit SWFs. The basic principles of World Trade Organization (WTO) law provide a legal
framework for regulating SWF investment while the members’ specific commitments may provide
significant liberalization. These positive elements for SWFs are tempered by the existence of
exceptions and the relative shortcomings of state-to-state dispute settlement in the WTO and the
lack of retroactive remedy. However, the paper shows that far from being perfect and complete,
the GATS provides an international basis for SWFs to devise their investment strategies and an
ideal forum in which to obtain further liberalization in current negotiations.
2015-03-01T00:00:00ZSovereign Wealth Funds: Investors in search of an identity in the twenty-first century
http://hdl.handle.net/10576/3876
Sovereign Wealth Funds: Investors in search of an identity in the twenty-first century
Hsu, Locknie
Sovereign Wealth Funds (SWFs), as they have come to be known, are a hybrid type of foreign investor. They invest beyond their own borders with an aim to maximize returns as a foreign
investor is expected to. At the same time, they are closely associated with governments, by ownership, source of funding, and/or investment objectives. Even as within this group, individual SWFs take various forms and may have divergent investment priorities and risk approaches. There is not even a universal definition of SWFs. As a result, they are often not viewed as typical foreign investors. The association of a SWF with a foreign government has raised various issues such as national security, trade protectionism and nationalism in the recipient countries. At the same time, due to the government ownership of some SWFs, they may fall into the group of business entities known as state-owned enterprises (SOEs). Given that SOEs are highly influential in some states, some recipient states have sought to subject SOEs to greater disciplines, such as in ensuring competition law and transparency principles apply to them, in order to level the playing field for other enterprises. Such disciplines have begun to appear in trade and investment treaties, and are coupled with the usual broad definitions of “investor” in such treaties. It is perhaps too early to state that there is a trend of greater legal and cross-border scrutiny over SOEs, and along with them, SWFs, in treaties. The Trans-Pacific Partnership Agreement that is under negotiation is an example of a potentially game-changing treaty which could affect SWFs qua SOEs. The challenge for SWFs is to carve a distinct identity in the twenty-first century, as more treaties that impose binding requirements arise. This article examines some recent developments, how SWFs may need to forge a unique identity and challenges of recipient states in balancing investment openness and the above concerns.
2015-03-01T00:00:00ZIncipient activism of Sovereign Wealth Funds and the need to update United States securities laws
http://hdl.handle.net/10576/3878
Incipient activism of Sovereign Wealth Funds and the need to update United States securities laws
Slawotsky, Joel
Sovereign Wealth Funds (SWFs) lie at the cutting edge of a tectonic transformation in global
business and international law embodying the sweeping changes in the global order. Illustrating
the new financial and legal paradigm, SWFs demonstrate the blurring of lines between public actor
states and private market actors. Ostensibly entrusted with the advancement of the public good of
their respective citizenry, SWFs traditionally invested their vast pools of capital in apolitical,
non-controversial, conservative government debt. Starting around 2006–2007, SWFs initiated an
aggressive campaign of diversification and commenced allocating their immense investment
capital into equity markets, real estate, energy projects, farming and private equity. This significant
change led to SWF investment becoming inextricably linked to strategic industries in recipient
nations. Simultaneously, apprehension developed in capital recipient nations with respect to
potential non-financial motivation of SWF investment and the interrelated national security
implications. In response, SWFs emphasized that they were not interested in exercising control
over companies or countries, voluntarily limited their stakes, and expressed intent to embrace a
passive shareholder approach. Since plowing into various investment markets, SWFs have
generally acted cautiously and refrained from activist conduct which substantially obviated
concerns over undue foreign control in host states. However, SWFs have recently undertaken a
more activist investment approach comparable to other large investors. While the SWF activism is
profits-centric, the behavioral shift reintroduces anxieties with respect to foreign government
influence over political decision-making in host nations as well as undue dominance over strategic
industry and infrastructure. Moreover, given their titanic financial strength, even profits based
investment raises concerns over SWF dominance and influence over financial markets, portfolio
companies and economic sectors.
In the United States, securities laws mandate disclosure and regulatory approval for certain
transactions. Such laws afford regulators an opportunity to review investment activity and provide
an alert to ascertain whether the investor is in compliance with rules and regulations. In light of
the budding activism, it is timely to examine whether securities laws need to be updated.
What are the ramifications of SWFs working with other SWFs with respect to acting in concert and
group action? Are SWF investors sufficiently different as to justify heightened regulation? This
article will examine current US regulatory policy, identify potential shortcomings in light of the
developing investment climate, and concludes with suggested reforms.
2015-03-01T00:00:00ZSovereign Wealth Funds: Problems of international law between possessing and recipient States
http://hdl.handle.net/10576/3877
Sovereign Wealth Funds: Problems of international law between possessing and recipient States
Nakatani, Kazuhiro
As the influence of Sovereign Wealth Funds (SWFs) is increasing in the world economy, the legal problems between the possessing States and recipient States become very important. The famous Santiago Principles are self-pledges of the governance and activities of SWFs by the possessing States and do not regulate the legal problems between the possessing States and the recipient States. This article considers the following relevant problems from the point of international law: (A) restrictions on foreign investment, (B) sovereign immunity, (C) taxation and (D) responsible investment. As to (A), although restrictions on foreign investment for national security reasons is generally permitted under international law, they should be guided by the principles of non-discrimination, transparency of policies and predictability of outcomes, proportionality of measures and accountability of implementing authorities.
As to (B), when SWFs are involved in a civil action concerning holding shares in a company, they cannot enjoy jurisdictional immunity. This is because holding shares come under participation on companies in the United Nations Convention on Jurisdictional Immunities of States and Their Property. As to (C), there is no established rule of customary international law whether SWFs are granted exemption from taxation in recipient States. State practice is mixed. Some States including Japan do not categorically grant exemption from taxation to SWFs, but grant it to specific SWFs based on bilateral tax treaties. As to (D), Norway’s Government Pension Fund Global and New Zealand Superannuation Fund are faithful to the method of responsible investment. The heart of its responsible investment lies in the disinvetement and negative screening in particular. The disinvestment does not constitute unlawful intervention under international law. Finally, the balance of interests between the possessing States and the recipient States has to be kept in order to attain an equitable result. The concept of equity, although somewhat ambiguous, can play an important role in this field.
2015-03-01T00:00:00Z