A bit of a challenge for India
Much ink has been spilled on the potential benefits of waiving intellectual property rights (IPRs) on COVID-19 vaccines, drugs and therapeutics protected by the Agreement on Trade Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO). However, in this debate, an interesting aspect that has not been explored is the relationship of the TRIPS waiver with bilateral investment treaties (BITs) and the chapters on investment in free trade agreements (FTAs). ).
BITs or investment chapters in FTAs protect foreign investment under international law by imposing conditions on the host country’s regulatory behavior and thereby prevent undue interference with the rights of foreign investors. These conditions include the prohibition of expropriating foreign investments by the host country in certain situations, the imposition on the host country of obligations to accord fair and equitable treatment (FET) to foreign investments, etc. An integral part of these investment treaties is that they allow foreign investors. bring actions directly against host countries for alleged treaty violations in investor-state dispute resolution courts (ISDS).
Foreign investors using ISDS for intellectual property enforcement
The definition of investment in these treaties covers IPRs. Therefore, pharmaceutical companies can use ISDS courts to adjudicate host country regulatory actions that infringe their intellectual property rights. Indeed, in recent years, foreign investors have used the ISDS regime to challenge host country’s IPR regulatory measures.
For example, in a case known as Eli Lilly vs. Canada, Eli lilly, an American pharmaceutical company challenged the invalidation of its patent by a Canadian federal court for “uselessness” under the investment chapter of the North American Free Trade Agreement (NAFTA). Likewise, Philip Morris, a tobacco company, brought separate actions against Australia and Uruguay under the Hong Kong-Australia and Switzerland-Uruguay BITs, respectively, alleging that the laws of those two countries requiring packaging neutral tobacco products adversely affected its IPRs.
If a TRIPS waiver were adopted, WTO member countries such as India – where international treaties are not automatically part of domestic law – should make appropriate changes to their national IPR laws to implement the waiver. These changes would depend on the actual conditions to which the waiver would be subject, which we do not to date. For example, countries may be allowed to temporarily suspend or not enforce IPRs on COVID-19 vaccines, drugs and therapeutics. In such a situation, pharmaceutical companies can bring BIT actions against the host country alleging that the suspension or non-enforcement of IPRs amounts to a violation of BIT standards such as expropriation, FET , etc.
BIT and TRIPS: a normative hierarchy in Indian investment treaties?
To understand the BIT challenge to the TRIPS waiver in the case of India, one can divide the Indian investment treaties into three sets. The first set of Indian BITs such as the recent ones signed with countries like Belarus, Taiwan, Kyrgyzstan and Brazil, include these treaties, which stipulate that sovereign actions in revocation, limitation or creation of IPR, in to the extent that such action is in conformity with the WTO agreement, would not fall within the scope of the treaty.
Under these BITs, India’s sovereign actions that are compatible with the TRIPS waiver would not violate foreign investment protection standards.
In relation to the aforementioned BITs, the second set of treaties is the chapters on India’s investment in FTAs signed with ASEAN and Japan. These chapters on FTA investment exempt compulsory licenses issued as a result of the TRIPS Agreement from the application of the BIT’s expropriation provision. In other words, if India issues a compulsory license in accordance with the requirements of the TRIPS Agreement, the ISDS tribunal would have no jurisdiction over the foreign investor’s claim that such a license amounts to an expropriation of his investment. However, in these treaties this exception does not extend to other substantive standards such as the FET provision.
In the third set of treaties which includes the majority of Indian BITs, there is no mention of the WTO or the TRIPS Agreement. Although India has unilaterally terminated several of these BITs, the sunset clause of these treaties allows the provisions of the treaty to continue to exist for a period of 10 to 15 years after termination, for investment made before the termination. deletion of the treaty.
In these treaties, the ISDS tribunal would not have the obligation to accord a higher normative value to the TRIPS agreement compared to the BIT. This would take the TRIPS waiver as just another element of international law in considering the investor’s claim. This critical difference in language can have a major impact on the outcome of the investor’s claim. This is not to say that the foreign investor would prevail over India in its challenge to IPR regulatory measures. Nonetheless, given the unpredictable way in which ISDS tribunals operate, it is unclear what normative weight the tribunal would give to the TRIPS waiver when deciding the BIT request.
The path to follow
Potential BIT claims by foreign pharmaceutical companies against India for revocation, suspension or non-enforcement of IPRs could undermine the benefits of a possible TRIPS waiver. Therefore, to preserve its regulatory autonomy, India should negotiate, multilaterally or bilaterally, with its treaty partners, a binding agreement, which renders the IPR-related measures on products necessary to combat COVID-19 not justiciable before ISDS courts.
This ILO-specific IPR waiver agreement could take the form of a separate multilateral or bilateral treaty declaring that it would replace any existing BITs with respect to affected COVID-19 products until the pandemic lasts. The other option is that India and its treaty partners could bilaterally sign this BIT-specific IPR waiver as a subsequent agreement under Article 31 (3) (a) of the Vienna Law Convention. treaties.
Prabhash Ranjan is Senior Assistant Professor in the Faculty of Legal Studies, University of South Asia and author of the book India and bilateral investment treaties: refusal, acceptance, backlash. The opinions expressed are personal.